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U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the
quarterly period ended
June 30, 2021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the
transition period from ________ to ________
Commission
file number
000-54296
AXIM Biotechnologies, Inc.
(Exact name
of registrant as specified in its charter)
Nevada |
|
27-4029386 |
(State or other
jurisdiction of incorporation or organization) |
|
(I.R.S. Employer
Identification Number) |
6191 Cornerstone Court,
E. Suite 114 |
San Diego,
CA
92121 |
(Address of
principal executive offices) |
|
(858)
923-4422 |
(Registrant’s
telephone number, including area code) |
|
|
(Former name,
former address and former fiscal year, if changed since last
report) |
Indicate by
check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirements for
the past 90 days.
Yes ☒ No ☐
Indicate by
check mark whether registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required
to submit and post such files). Yes ☐
No ☒
Indicate by
check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer,” “smaller reporting company” and “emerging
growth company” in Rule12b-2 of the Exchange Act.
Large
accelerated
Filer
|
Accelerated
Filer
|
Non-accelerated filer
(Do not
check if smaller
reporting
company)
|
Smaller
reporting
Company
|
Emerging
growth
Company
|
☐ |
☐ |
☐ |
☒ |
☐ |
Indicate by
check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes☐
No ☒
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by
check mark whether the registrant filed all documents and reports
required to be filed by Section 12, 13, or 15(d) of the Exchange
Act of 1934 after the distribution of securities under a plan
confirmed by a court. Yes ☐ No ☐
APPLICABLE
ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s
classes of common stock, as of the latest practicable date:
133,261,989 of common stock, par value $0.0001 per share,
outstanding as
of August 20, 2021.
PART I –
FINANCIAL INFORMATION
Item 1.
Financial Statements
AXIM
BIOTECHNOLOGIES, INC.
|
Page |
Condensed
Consolidated Balance Sheet as of June 30, 2021 (unaudited) and
December 31, 2020 |
4 |
|
|
Condensed
Consolidated Statements of Operations for the three and six months
periods ended June 30, 2021 and 2020 (unaudited) |
5 |
|
|
Condensed
Consolidated Statement of Changes in Shareholders’ Deficit for the
six months ended June 30, 2021 and 2020 (unaudited) |
6 |
|
|
Condensed
Consolidated Statement of Cash Flows for the six months ended June
30, 2021 and 2020 (unaudited) |
7 |
|
|
Notes to Condensed
Consolidated Financial Statements (unaudited). |
8 |
AXIM
BIOTECHNOLOGIES, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
As of
June 30, 2021
|
|
June 30, 2021 |
|
Dec 31, 2020 |
|
|
(unaudited) |
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
202,185 |
|
|
$ |
457,181 |
|
Accounts receivables |
|
|
11,873 |
|
|
|
— |
|
Prepaid expenses |
|
|
177,258 |
|
|
|
255,923 |
|
Inventory |
|
|
20,509 |
|
|
|
— |
|
Total current assets |
|
|
411,825 |
|
|
|
713,104 |
|
|
|
|
|
|
|
|
|
|
Property and equipment, net of
accumulated depreciation |
|
|
110,932 |
|
|
|
104,094 |
|
|
|
|
|
|
|
|
|
|
Other Assets: |
|
|
|
|
|
|
|
|
Notes receivable- related
party |
|
|
103,755 |
|
|
|
103,242 |
|
Goodwill |
|
|
2,458,233 |
|
|
|
2,458,233 |
|
Developed research in progress, net
of accumulated amortization |
|
|
7,158,904 |
|
|
|
7,800,000 |
|
Security deposit |
|
|
5,000 |
|
|
|
5,000 |
|
Operating lease right-of-use
asset |
|
|
104,185 |
|
|
|
130,722 |
|
Total other assets |
|
|
9,830,077 |
|
|
|
10,497,197 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
10,352,834 |
|
|
$ |
11,314,395 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
$ |
853,210 |
|
|
$ |
1,073,142 |
|
Lease liability obligations (see note
15) |
|
|
58,540 |
|
|
|
53,851 |
|
Due to shareholder |
|
|
180 |
|
|
|
180 |
|
Due to first insurance
funding |
|
|
98,888 |
|
|
|
25,369 |
|
Promissory note (including accrued
interest of $29,234 and $19,507, respectively)(see note
7) |
|
|
353,452 |
|
|
|
343,725 |
|
Total current liabilities |
|
|
1,364,270 |
|
|
|
1,496,267 |
|
|
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
Deferred tax liability |
|
|
2,340,000 |
|
|
|
2,340,000 |
|
Convertible note payable (including
accrued interest of $192,521 and $236,148, respectively) net
of unamortized debt discount of $640,552 and $843,673, respectively(see
note 10) |
|
|
1,336,282 |
|
|
|
1,676,788 |
|
Convertible note payable - related
party (including accrued interest of $229,037 and $158,648,
respectively) |
|
|
4,229,037 |
|
|
|
4,158,648 |
|
Lease liability obligations (see note
15) |
|
|
45,645 |
|
|
|
76,871 |
|
Total long-term
liabilities |
|
|
7,950,964 |
|
|
|
8,252,307 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
9,315,234 |
|
|
|
9,748,574 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Preferred stock, $0.0001
par value, 5,000,000
shares authorized; |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series B Convertible Preferred Stock,
$0.0001
par value
500,000 shares
designated,
0 and
0 shares issued
and outstanding, respectively |
|
|
— |
|
|
|
— |
|
Series C Convertible Preferred Stock,
$0.0001
par value 500,000
shares designated, 500,000
and 500,000
shares issued and outstanding, respectively |
|
|
50 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
Common stock, $0.0001
par value, 300,000,000
shares authorized 133,024,435
and 125,327,579
shares issued and outstanding, respectively |
|
|
13,302 |
|
|
|
12,533 |
|
Additional paid in
capital |
|
|
47,763,130 |
|
|
|
43,201,186 |
|
Subscription receivable |
|
|
(332,500 |
) |
|
|
— |
|
Common stock to be issued |
|
|
135,000 |
|
|
|
201,974 |
|
Accumulated deficit |
|
|
(46,541,382 |
) |
|
|
(41,849,922 |
) |
TOTAL
STOCKHOLDERS' DEFICIT |
|
|
1,037,600 |
|
|
|
1,565,821 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT |
|
$ |
10,352,834 |
|
|
$ |
11,314,395 |
|
See
accompanying notes are an integral part of these unaudited
condensed consolidated financial statements
AXIM
BIOTECHNOLOGIES, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
As of
June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
For the |
|
For the |
|
For the |
|
For the |
|
|
Three Months Ended |
|
Three Months Ended |
|
Six Months Ended |
|
Six Months Ended |
|
|
June 30, 2021 |
|
June 30, 2020 |
|
June 30, 2021 |
|
June 30, 2020 |
|
|
|
|
|
|
|
|
|
Revenues |
|
|
14,875 |
|
|
|
— |
|
|
|
47,524 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
14,875 |
|
|
|
— |
|
|
|
47,524 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development expenses |
|
|
48,066 |
|
|
|
121,437 |
|
|
|
149,019 |
|
|
|
126,292 |
|
Selling,
general and administrative |
|
|
1,499,917 |
|
|
|
537,140 |
|
|
|
2,293,263 |
|
|
|
1,257,816 |
|
Amortization of Other Assets |
|
|
641,096 |
|
|
|
— |
|
|
|
641,096 |
|
|
|
— |
|
Depreciation |
|
|
6,834 |
|
|
|
4,285 |
|
|
|
13,184 |
|
|
|
5,124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses from continuing
operations |
|
|
2,195,913 |
|
|
|
662,862 |
|
|
|
3,096,562 |
|
|
|
1,389,232 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain
(Loss) from continuing operations |
|
|
(2,181,038 |
) |
|
|
(662,862 |
) |
|
|
(3,049,038 |
) |
|
|
(1,389,232 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(income) expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income |
|
|
(257 |
) |
|
|
(158 |
) |
|
|
(513 |
) |
|
|
(158 |
) |
Income from Grants
from Government |
|
|
(129,995 |
) |
|
|
— |
|
|
|
(219,995 |
) |
|
|
— |
|
Unrealized loss
(gain) on marketable securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
104,705 |
|
Realized loss
(gain) on marketable securities |
|
|
— |
|
|
|
109,040 |
|
|
|
— |
|
|
|
109,040 |
|
Amortization of
note discount |
|
|
181,295 |
|
|
|
22,071 |
|
|
|
203,122 |
|
|
|
41,432 |
|
Loss on
Extinguishment of Debt |
|
|
1,535,264 |
|
|
|
— |
|
|
|
1,535,264 |
|
|
|
— |
|
Interest
expense |
|
|
59,576 |
|
|
|
55,957 |
|
|
|
119,908 |
|
|
|
106,075 |
|
Total other (income) expenses |
|
|
1,645,883 |
|
|
|
186,910 |
|
|
|
1,637,786 |
|
|
|
361,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations |
|
|
(3,826,921 |
) |
|
|
(849,772 |
) |
|
|
(4,686,824 |
) |
|
|
(1,750,326 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
(loss) from discontinued operations |
|
|
— |
|
|
|
770,383 |
|
|
|
(4,633 |
) |
|
|
(357,430 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
|
|
(3,826,921 |
) |
|
|
(79,389 |
) |
|
|
(4,691,457 |
) |
|
|
(2,107,756 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME / LOSS ATTRIBUTABLE TO COMMON
SHAREHOLDERS |
|
|
(3,826,921 |
) |
|
|
(79,389 |
) |
|
|
(4,691,457 |
) |
|
|
(2,107,756 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
(0.03 |
) |
|
|
(0.01 |
) |
|
|
(0.04 |
) |
|
|
(0.02 |
) |
Diluted |
|
|
(0.03 |
) |
|
|
(0.01 |
) |
|
|
(0.04 |
) |
|
|
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
— |
|
|
|
0.01 |
|
|
|
0 |
|
|
|
0 |
|
Diluted |
|
|
— |
|
|
|
0.01 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
(0.03 |
) |
|
|
0 |
|
|
|
(0.04 |
) |
|
|
(0.02 |
) |
Diluted |
|
|
(0.03 |
) |
|
|
0 |
|
|
|
(0.04 |
) |
|
|
(0.02 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding -
basic and diluted |
|
|
129,741,614 |
|
|
|
128,464,227 |
|
|
|
127,740,107 |
|
|
|
101,877,631 |
|
See accompanying notes are an
integral part of these unaudited condensed consolidated financial
statements
AXIM
BIOTECHNOLOGIES, INC.
Unaudited
Condensed Consolidated Statement of Stockholders'
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series B Convertible |
|
|
|
Series C Convertible |
|
|
|
|
|
|
|
Subscription |
|
|
|
|
|
|
Common Stock |
|
|
|
Preferred Stock |
|
|
|
Preferred Stock |
|
|
|
Common Stock |
|
Additional |
|
Amount |
|
Accumulated |
|
|
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
to be Issued |
|
Paid In Capital |
|
Receivable |
|
Deficit |
|
Total |
Balance at December 31,
2019 |
|
|
64,854,539 |
|
|
$ |
6,486 |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
$ |
50,000 |
|
|
$ |
28,623,060 |
|
|
$ |
— |
|
|
$ |
(35,440,042 |
) |
|
$ |
(6,760,397 |
) |
Common stock to be issued for Note
receivable and True-up adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Common stock issued against common
stock to be issued received in PY |
|
|
250,000 |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50,000 |
) |
|
|
49,975 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
Common stock issued for
services |
|
|
662,839 |
|
|
|
66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
287,434 |
|
|
|
|
|
|
|
|
|
|
|
287,500 |
|
Common stock issued under
registration statement on Form S-3 |
|
|
3,541,667 |
|
|
|
355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
962,145 |
|
|
|
|
|
|
|
|
|
|
|
962,500 |
|
Subscription price adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(518,948 |
) |
|
|
|
|
|
|
|
|
|
|
(518,948 |
) |
Beneficial conversion of 190K
convertible note |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190,000 |
|
|
|
|
|
|
|
|
|
|
|
190,000 |
|
Common stock issued for
acquisition |
|
|
54,000,000 |
|
|
|
5,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500,600 |
|
|
|
|
|
|
|
|
|
|
|
7,506,000 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(2,028,367 |
) |
|
|
(2,028,367 |
) |
Balance at March 31, 2020 |
|
|
123,309,045 |
|
|
$ |
12,331 |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
$ |
— |
|
|
$ |
37,094,266 |
|
|
$ |
— |
|
|
$ |
(37,468,409 |
) |
|
$ |
(361,712 |
) |
Common stock to be issued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,000 |
|
Common stock issued for
severance |
|
|
477,025 |
|
|
|
48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
149,952 |
|
|
|
|
|
|
|
|
|
|
|
150,000 |
|
Common stock issued under
registration statement on Form S-3 |
|
|
3,953,125 |
|
|
|
395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
547,605 |
|
|
|
|
|
|
|
|
|
|
|
548,000 |
|
Common stock issued per stock
purchase agreement |
|
|
3,975,383 |
|
|
|
397 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
699,603 |
|
|
|
|
|
|
|
|
|
|
|
700,000 |
|
Series B preferred stock
retirement |
|
|
|
|
|
|
|
|
|
|
(500,000 |
) |
|
|
(50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(50 |
) |
Retired common stock |
|
|
(18,570,356 |
) |
|
|
(1,857 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,857 |
) |
Subscription price adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(90,887 |
) |
|
|
|
|
|
|
|
|
|
|
(90,887 |
) |
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(79,389 |
) |
|
|
(79,389 |
) |
Balance at June 30, 2020 |
|
|
113,144,222 |
|
|
$ |
11,314 |
|
|
|
— |
|
|
$ |
— |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
$ |
135,000 |
|
|
$ |
38,400,539 |
|
|
$ |
— |
|
|
$ |
(37,547,798 |
) |
|
$ |
999,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31,
2020 |
|
|
125,327,579 |
|
|
$ |
12,533 |
|
|
|
— |
|
|
$ |
— |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
$ |
201,974 |
|
|
$ |
43,201,186 |
|
|
$ |
— |
|
|
$ |
(41,849,922 |
) |
|
$ |
1,565,821 |
|
Common stock to be issued for Note
receivable and True-up adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Common stock to be issued for
purchase of shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168,500 |
|
Common stock issued against common
stock to be issued received in PY |
|
|
108,965 |
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(66,974 |
) |
|
|
66,963 |
|
|
|
|
|
|
|
|
|
|
|
— |
|
Common stock issued for severance
payable of discontinued operation |
|
|
379,463 |
|
|
|
38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
224,963 |
|
|
|
|
|
|
|
|
|
|
|
225,001 |
|
Common stock issued for
cash |
|
|
1,712,500 |
|
|
|
171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
433,829 |
|
|
|
|
|
|
|
|
|
|
|
434,000 |
|
Stock based compensation - stock
options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,742 |
|
|
|
|
|
|
|
|
|
|
|
99,742 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(864,536 |
) |
|
|
(864,536 |
) |
Balance at March 31, 2021 |
|
|
127,528,507 |
|
|
$ |
12,753 |
|
|
|
— |
|
|
$ |
— |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
$ |
303,500 |
|
|
$ |
44,026,683 |
|
|
$ |
— |
|
|
$ |
(42,714,458 |
) |
|
$ |
1,628,528 |
|
Common stock issued for
services |
|
|
1,114,351 |
|
|
|
111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16,000 |
) |
|
|
792,389 |
|
|
|
|
|
|
|
|
|
|
|
776,500 |
|
Common stock issued for
cash |
|
|
1,234,113 |
|
|
|
123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(152,500 |
) |
|
|
402,376 |
|
|
|
|
|
|
|
|
|
|
|
249,999 |
|
Convertible note and accrued interest
converted to common stock |
|
|
2,647,464 |
|
|
|
265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
582,442 |
|
|
|
|
|
|
|
|
|
|
|
582,707 |
|
Other |
|
|
500,000 |
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
332,450 |
|
|
|
(332,500 |
) |
|
|
|
|
|
|
— |
|
Stock based compensation - stock
options |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
91,526 |
|
|
|
|
|
|
|
|
|
|
|
91,526 |
|
Loss on extinguishment of
debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,535,264 |
|
|
|
|
|
|
|
|
|
|
|
1,535,264 |
|
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
(3,826,924 |
) |
|
|
(3,826,924 |
) |
Balance at June 30, 2021 |
|
|
133,024,435 |
|
|
$ |
13,302 |
|
|
|
— |
|
|
$ |
— |
|
|
|
500,000 |
|
|
$ |
50 |
|
|
$ |
135,000 |
|
|
$ |
47,763,130 |
|
|
$ |
(332,500 |
) |
|
$ |
(46,541,382 |
) |
|
$ |
1,037,600 |
|
See
accompanying notes are an integral part of these unaudited
condensed consolidated financial statements
AXIM
BIOTECHNOLOGIES, INC.
Unaudited
Condensed Consolidated Statement of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
For the
Six months Ended
June 30, 2021
|
|
For the
Six Months
Ended
June 30, 2020
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
|
Net
loss |
|
$ |
(4,691,457 |
) |
|
$ |
(2,107,756 |
) |
Less:
Gain (Loss) from discontinued operations |
|
|
(4,633 |
) |
|
|
(357,430 |
) |
Loss
from continuing operations |
|
|
(4,686,824 |
) |
|
|
(1,750,326 |
) |
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to
cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
13,184 |
|
|
|
5,124 |
|
Stock based
compensation |
|
|
191,266 |
|
|
|
287,500 |
|
Amortization of
prepaid insurance/expense |
|
|
216,158 |
|
|
|
68,079 |
|
Amortization of
debt discount |
|
|
203,121 |
|
|
|
41,432 |
|
Common stock
issued for services |
|
|
776,500 |
|
|
|
— |
|
Amortization(impairment) of intangible assets |
|
|
641,096 |
|
|
|
6,763 |
|
Loss on
extinguishment of debt |
|
|
1,535,264 |
|
|
|
— |
|
Unrealized (gain)
loss on marketable securities |
|
|
— |
|
|
|
104,705 |
|
Realized (gain)
loss on marketable securities |
|
|
— |
|
|
|
109,040 |
|
|
|
|
|
|
|
|
|
|
Changes in operating assets &
liabilities: |
|
|
|
|
|
|
|
|
Increase in
accounts receivable |
|
|
(11,872 |
) |
|
|
— |
|
(Increase) in
interest receivable |
|
|
(514 |
) |
|
|
— |
|
Increase in
prepaid insurance/expenses |
|
|
(137,493 |
) |
|
|
(94,779 |
) |
Increase in inventory |
|
|
(20,509 |
) |
|
|
— |
|
Increase in accounts payable and accrued expenses |
|
|
124,263 |
|
|
|
209,784 |
|
Net cash provided
by (used in) operating activities from continuing operations |
|
|
(1,156,360 |
) |
|
|
(1,012,678 |
) |
Net
cash provided by (used in) operating activities from discontinued
operations |
|
|
(4,633 |
) |
|
|
(797,939 |
) |
Net
cash provided by (used in) operating activities |
|
|
(1,160,993 |
) |
|
|
(1,810,617 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOW FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Cash acquired in
acquisition |
|
|
— |
|
|
|
79,814 |
|
Purchase of property and equipment |
|
|
(20,022 |
) |
|
|
(70,828 |
) |
Net cash provided
by (used in) investing activities from continuing operations |
|
|
(20,022 |
) |
|
|
8,986 |
|
Net
cash provided by (used in) investing activities from discontinued
operations |
|
|
— |
|
|
|
— |
|
Net
cash provided by (used in) investing activities |
|
|
(20,022 |
) |
|
|
8,986 |
|
|
|
|
|
|
|
|
|
|
CASH FLOW FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Common stock
issued under registration statement on Form S-3 |
|
|
— |
|
|
|
1,510,500 |
|
Common stock
issued under SPA |
|
|
852,500 |
|
|
|
700,000 |
|
Proceed
from First Insurance Funding |
|
|
73,519 |
|
|
|
35,933 |
|
Net cash provided
by (used in) continuing financing activities |
|
|
926,019 |
|
|
|
2,246,433 |
|
Net
cash provided by (used in) discontinued financing activities |
|
|
— |
|
|
|
(65,000 |
) |
Net
cash provided by (used in) financing activities |
|
|
926,019 |
|
|
|
2,181,433 |
|
|
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents |
|
|
(254,996 |
) |
|
|
379,802 |
|
Cash
and cash equivalents at beginning of period |
|
|
457,181 |
|
|
|
511,630 |
|
Cash
and cash equivalents at end of period |
|
$ |
202,185 |
|
|
$ |
891,432 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION |
|
|
|
|
|
|
|
|
CASH PAID
DURING THE PERIOD FOR: |
|
|
|
|
|
|
|
|
Interest |
|
$ |
— |
|
|
$ |
— |
|
Income taxes - net of tax refund |
|
$ |
— |
|
|
$ |
— |
|
NON-CASH
INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Common stock issued against common stock to be issued |
|
$ |
66,974 |
|
|
$ |
50,000 |
|
Account receivable against conversion of debt and interest |
|
$ |
— |
|
|
$ |
75,074 |
|
Common stock issued for severance |
|
$ |
225,000 |
|
|
$ |
150,000 |
|
Shares issued for acquisition of Sapphire Biotechnology |
|
$ |
— |
|
|
$ |
7,506,000 |
|
Deferred tax liability accounted for as a result of Sapphire
Biotech Acquisition |
|
$ |
— |
|
|
$ |
1,845,000 |
|
Assets acquired and liability assumed for as a result of Sapphire
Biotech Acquisition |
|
$ |
— |
|
|
$ |
525,365 |
|
BCF
related to discount on conversion |
|
$ |
— |
|
|
$ |
190,000 |
|
Common stock issued for note receivable |
|
$ |
— |
|
|
$ |
135,000 |
|
Adoption of lease obligation and ROU asset |
|
$ |
— |
|
|
$ |
164,910 |
|
Common stock retired |
|
$ |
— |
|
|
$ |
1,857 |
|
Subscription
price adjustment |
|
$ |
— |
|
|
$ |
609,835 |
|
Convertible note and accrued interest converted to common
stock |
|
$ |
582,707 |
|
|
$ |
— |
|
Others |
|
$ |
— |
|
|
$ |
71,782 |
|
See
accompanying notes are an integral part of these unaudited
condensed consolidated financial statements
AXIM
BIOTECHNOLOGIES, INC.
NOTES TO
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
June 30,
2021 and 2020
NOTE 1:
ORGANIZATION
Axim
Biotechnologies, Ind., (the “Company”) was originally incorporated
in Nevada on November 18,
2010, as Axim International Inc. On July 24, 2014, the
Company changed its name to AXIM Biotechnologies, Inc. to better
reflect its business operations. The Company’s principal executive
office is located at 6181 Cornerstone Court E Suite 114, San Diego,
CA 92121. On August 7, 2014, the Company formed a wholly owned
Nevada subsidiary named Axim Holdings, Inc. This subsidiary will be
used to help facilitate the anticipated activities planned by the
Company. On May 11, 2015 the Company acquired a 100% interest in
Can Chew License Company a Nevada incorporated licensing Company,
through the exchange of 5,826,706 shares of its common
stock.
On March 17,
2020, the Company acquired Sapphire Biotech, Inc., (“Sapphire’)
which is research and
Development Company that has a mission to improve global cancer
care through the development of proprietary therapeutics for
inhibiting cancer growth and metastasis. Sapphire is also
developing a line of novel diagnostics for early cancer detection,
response to treatment, and recurrence monitoring.
Additionally, with the onset of the COVID-19 pandemic, the Company
decided to begin creating COVID-19 rapid diagnostic tools,
including multiple first-in-class COVID-19 neutralizing antibody
tests and other innovations.
Sapphire’s operations are located in the Greater San Diego
Area.
Company
Developments – Divesture of Cannabis Related
Assets
On May 6,
2020 (the “Effective Date”), AXIM Biotechnologies, Inc., a Nevada
corporation (the “Company”), entered into an Agreement (the
“Separation Agreement”) by and among the Company, CanChew License
Company (“CanCo”), CanChew Biotechnologies, LLC (“CanChew”),
Medical Marijuana, Inc., Dr. George A. Anastassov (“Dr.
Anastassov”), Dr. Philip A. Van Damme (“Dr. Van Damme”), Lekhram
Changoer (“Mr. Changoer”), Sanammad Foundation, Netherlands and
Sanammad Foundation, US (collectively, the “Sanammad Parties”),
pursuant to which, among other matters as described herein, Drs.
Anastassov and Van Damme and Mr. Changoer resigned as members of
the Company’s Board of Directors.
Pursuant to
the Separation Agreement, the Company transferred and assigned to
an entity designated by Dr. Anastassov all of the Company’s
cannabis-related intellectual property other than the inventions
and discoveries described in that certain cannabis-related patent
application filed by the Company’s wholly-owned subsidiary,
Sapphire Biotech, Inc. (water-soluble cannabinoid molecules). The
Company also transferred 100% of its interest in CanCo and CanChew
to an entity designated by Dr. Anastassov. In consideration for the
transfers set forth above, any and all indebtedness owed by the
Company to CanChew, totaling approximately $2.61 million, was
satisfied and paid in its entirety.
In addition,
in consideration for the payment by the Company of $65,000, the
Company purchased 100% of the issued and outstanding shares of
Series B Preferred Stock held by the Sanammad Parties. Such shares
shall be retired to treasury of the Company. The Sanammad Parties
also agreed to forfeit and assign back to treasury, for no
consideration, a total of 18,570,356 shares of the Company’s common
stock.
NOTE 2: ACQUISITION OF
SAPPHIRE BIOTECH, INC.
On March 17,
2020, the Company entered into a Share Exchange Agreement
(“Agreement”) with Sapphire Biotech, Inc., a Delaware corporation
(“Sapphire”) and all the Sapphire stockholders (collectively, the
“Sapphire Stockholders”). Following the closing of the transaction,
Sapphire will become a wholly owned subsidiary of AXIM.
Under the
terms of the Agreement, the Company: (i) acquired 100% of
Sapphire’s outstanding capital (consisting of 100,000,000 shares of
common stock and zero (0) shares of Preferred Stock); and (ii)
assume all of the outstanding debt of Sapphire. The outstanding
debt includes two (2) convertible notes in the principal amounts of
$310,000 and $190,000. Pursuant to the terms of the Share Exchange
Agreement, the Company acquired 100% of the issued and outstanding
shares of Sapphire by means of a share exchange with the Sapphire
Stockholders in exchange for 54,000,000 newly issued
shares of the common stock of AXIM (the “Share Exchange”). As a
result of the Share Exchange, Sapphire became a 100% owned
subsidiary of AXIM, which on a going forward basis will result in
consolidated financial reporting by AXIM to include the results of
Sapphire. The closing of the Share Exchange occurred concurrently
with entry into the Share Exchange Agreement (the
“Closing”).
In March
2020, the Company acquired SAPPHIRE BIOTECH, Inc., a biotechnology
company focusing on improving cancer care through the development
of proprietary therapeutics for inhibiting cancer growth and
metastasis. The Company issued 54,000,000 shares of common stock
with a total fair value of $7,506,000 and assumed net liabilities
of $412,233 (resulting in a total acquisition cost of $7,918,233),
in exchange for all outstanding shares of SAPPHIRE BIOTECH, Inc.
The Company accounted for the acquisition using the acquisition
method of accounting for business combinations. On the acquisition
date, the Company performed a preliminary allocation of the
purchase price to include the tangible assets acquired and the
liabilities assumed with the remainder of the purchase price
allocated to patents pending approval, in-process research and
development (IPR&D) and goodwill. The Company incurred $6,000
of acquisition-related costs, which will be recorded as expense
after the evaluation work been completed. In addition, the Company
recorded an estimated deferred tax liability on the assets
acquired, except for goodwill for which deferred taxes are not
applicable.
The Company
completed the valuation of the intangible assets acquired in the
SAPPHIRE BIOTECH, Inc. transaction by September 2020. Pursuant to
the valuation, the Company determined that the patents continue to
be expanded and chose to subsume the patents within the IPR&D
balance. In management’s judgment, the amount assigned to IPR&D
represents the amount the Company would reasonably expect to pay an
unrelated party for each project included in the technology. Based
on the final valuation, the remaining excess purchase price has
been allocated to goodwill.
The
aggregate purchase price of $7,918,233 consisted of common stock
valued at $7,506,000 and the net liabilities assumed of $412,233. The value of the
$7,506,000 of common shares issued was determined based on the
closing price of the Company’s common shares at the acquisition
date.
The
following table summarizes the consideration paid for SAPPHIRE
BIOTECH and the estimated amounts of the assets acquired and
liabilities assumed recognized at the acquisition date.
Schedule of consideration paid |
|
|
|
|
Consideration: |
|
|
Cash and cash equivalents |
|
$ |
79,814 |
|
Property
and equipment, net |
|
|
20,533 |
|
In
process Research & Development (IPRD) |
|
|
7,800,000 |
|
Goodwill |
|
|
2,458,233 |
|
Security deposit |
|
|
12,785 |
|
Total asset acquired |
|
$ |
10,371,365 |
|
|
|
|
|
|
Accrued
expenses and other current liabilities |
|
$ |
5,767 |
|
Deferred
taxes liability |
|
|
2,340,000 |
|
Notes Payable including convertible and discount
on conversion |
|
|
519,598 |
|
Total liabilities assumed |
|
$ |
2,865,365 |
|
Net assets acquired |
|
$ |
7,506,000 |
|
The fair
value of acquired IPR&D was determined using the income
approach, based on the likelihood of success of products reaching
final development and commercialization. The fair value of acquired
IPR&D was capitalized as of the Closing Date and is
subsequently accounted for as an indefinite-lived intangible asset
until completion or abandonment of the associated research and
development efforts. Accordingly, during the development period
after the Closing Date, this asset will be amortized over a period
of 36 months.
The acquired in process Research and development as it relates to
rapid COVID testing has reached the commercialization stage and is
awaiting FDA EUA.
The
$2,458,233 of goodwill is not expected to be deductible for tax
purposes.
The
effective settlement of receivable/payable between the Company and
Sapphire deemed to be not material, which was recorded as gain on
intercompany transaction in P&L.
NOTE 3: BASIS OF
PRESENTATION:
The
unaudited condensed consolidated financial statements of AXIM
Biotechnologies, Inc. (formerly Axim International,
Inc.) as of June 30, 2021, and for the three months
period ended June 30, 2021 and 2020 have been prepared in
accordance with United States generally accepted accounting
principles (“US GAAP”).
The
following (a) balance sheets as of June 30, 2021 (unaudited) and
December 31, 2020, which have been derived from audited financial
statements, and (b) the unaudited interim statements of operations
and cash flows of AXIM Biotechnologies, Inc. (the “Company”) have
been prepared in accordance with accounting principles generally
accepted in the United States (“GAAP”) for interim financial
information and the instructions to Form 10-Q and Rule 8-03 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by GAAP for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the
three and six months ended June 30, 2021 are not necessarily
indicative of results that may be expected for the year ending
December 31, 2021. These unaudited financial statements should be
read in conjunction with the audited financial statements and notes
thereto for the year ended December 31, 2020 included in the
Company’s Annual Report on Form 10-K, filed with the Securities and
Exchange Commission (“SEC”) on April 26, 2021.
Principles of
Consolidation
The
consolidated financial statements include the accounts of Axim
Biotechnologies, Inc. and its wholly owned subsidiaries Axim
Holdings, Inc., Marina Street LLC, Axim Biotechnologies (the
Netherland Company) and Sapphire Biotech, Inc. The consolidated
financial statements include the accounts of the Company and its
wholly-owned subsidiaries. All significant inter-company balances
and transactions have been eliminated upon
consolidation.
NOTE 4:GOING
CONCERN
The
Company’s condensed consolidated financial statements have been
presented assuming that the Company will continue as a going
concern. The Company has incurred significant losses and negative
cash flows from operations in all periods since inception and had
an accumulated deficit as of June 30, 2021. The Company has
historically financed its operations primarily through the sale of
common stock, promissory notes and convertible notes. To date, none
of the Company’s products related to continuing operations are
still in the product development phase. Management expects
operating losses to continue and increase for the foreseeable
future, as the Company progresses into clinical development
activities for its lead product candidates. The Company’s prospects
are subject to risks, expenses and uncertainties frequently
encountered by companies in the biotechnology industry. As shown in
the condensed consolidated financial statements, the Company has
deficit in working capital of $952,445 and has an accumulated
deficit of $46,541,382
and has cash
used in operating activities of continuing operations $1,156,360
and discontinued operations of $4,633.
The Company intends to raise substantial additional capital through
private placements of debt and equity securities, but there can be
no assurance that these funds will be available on terms acceptable
to the Company or will be sufficient to enable the Company to fully
complete its development activities or sustain operations. If the
Company is unable to raise sufficient additional funds, it will
have to develop and implement a plan to further extend payables,
reduce overhead, or scale back its current business plan until
sufficient additional capital is raised to support further
operations. There can be no assurance that such a plan will be
successful. That will raise a doubt about the ability of the
Company to continue as a going concern. The unaudited condensed
consolidated financial
statements do not include any adjustments related to the
recoverability of assets and classification of liabilities that
might be necessary should the Company be unable to continue in
operation.
NOTE 5: SIGNIFICANT
ACCOUNTING POLICIES
Use of
estimates
The
preparation of the unaudited condensed consolidated financial
statements in conformity with accounting principles generally
accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements as well as the
reported amounts of revenue and expenses during reporting periods.
Actual results could differ from these estimates. Significant
estimates are assumptions about collection of accounts receivable,
intangible assets, useful life of intangible assets, determination
of the discount rate for operating leases and assumptions used in
Black-Scholes-Merton, or BSM, valuation methods, such as expected
volatility, risk-free interest rate and expected dividend
rate.
Risks and
uncertainties
The Company
operates in a dynamic and highly competitive industry and is
subject to risks and uncertainties common to early-stage companies
in the biotechnology industry, including, but not limited to,
development by competitors of new technological innovations,
protection of proprietary technology, dependence on key personnel,
contract manufacturer and contract research organizations,
compliance with government regulations and the need to obtain
additional financing to fund operations. Product candidates
currently under development will require significant additional
research and development efforts, including extensive preclinical
studies and clinical trials and regulatory approval, prior to
commercialization. These efforts require significant amounts of
additional capital, adequate personnel infrastructure and extensive
compliance and reporting. The Company believes that changes in any
of the following areas could have a material adverse effect on the
Company’s future financial position, results of operations, or cash
flows; ability to obtain future financing; advances and trends in
new technologies and industry standards; results of clinical
trials; regulatory approval and market acceptance of the Company’s
products; development of sales channels; certain strategic
relationships; litigation or claims against the Company based on
intellectual property, patent, product, regulatory, or other
factors; and the Company’s ability to attract and retain employees
necessary to support its growth.
Products
developed by the Company require approvals from the U.S. Food and
Drug Administration (“FDA”) or other international regulatory
agencies prior to commercial sales. There can be no assurance that
the Company’s research and development will be successfully
completed, that adequate protection for the Company’s intellectual
property will be obtained or maintained, that the products will
receive the necessary approvals, or that any approved products will
be commercially viable. If the Company was denied approval,
approval was delayed or the Company was unable to maintain
approval, it could have a materially adverse impact on the Company.
Even if the Company’s product development efforts are successful,
it is uncertain when, if ever, the Company will generate revenue
from product sales. The Company operates in an environment of rapid
change in technology and substantial competition from other
pharmaceutical and biotechnology companies. In addition, the
Company is dependent upon the services of its employees,
consultants and other third parties.
Beginning in
late 2019, the outbreak of a novel strain of virus named SARS-CoV-2
(severe acute respiratory syndrome coronavirus 2), or coronavirus,
which causes coronavirus disease 2019, or COVID-19, has evolved
into a global pandemic. The extent of the impact of the coronavirus
outbreak on the Company’s business will depend on certain
developments, including the duration and spread of the outbreak and
the extent and severity of the impact on the Company’s clinical
trial activities, research activities and suppliers, all of which
are uncertain and cannot be predicted. At this point, the extent to
which the coronavirus outbreak may materially impact the Company’s
financial condition, liquidity or results of operations is
uncertain. The Company has expended and will continue to expend
substantial funds to complete the research, development and
clinical testing of product candidates. The Company also will be
required to expend additional funds to establish
commercial-scale manufacturing arrangements and to provide for
the marketing and distribution of products that receive regulatory
approval. The Company may require additional funds to commercialize
its products. The Company is unable to entirely fund these efforts
with its current financial resources. If adequate funds are
unavailable on a timely basis from operations or additional sources
of financing, the Company may have to delay, reduce the scope of or
eliminate one or more of its research or development programs
which would materially and adversely affect its business,
financial condition and operations.
There have
been no material changes in the accounting policies from those
disclosed in the financial statements and the related notes
included in the Form 10-K.
Cash
equivalents
The Company
considers all highly liquid investments with original maturities of
three months or less at the time of purchase to be cash
equivalents. As of June 30, 2021 and December 31, 2020, the Company
had no cash
equivalents. Cash and cash equivalents are maintained at financial
institutions and, at times, balances may exceed federally insured
limits. The Company had no uninsured balances at June 30, 2021 and
December 31, 2020. The Company has never experienced any losses
related to these balances.
Accounts
Receivable
It is the
Company’s policy to review accounts receivable at least on monthly
basis for conductibility and follow up with customers accordingly.
Covid19 has slowed collection as our customers are in a mandated
pause. The Company have geographic concentration of customers
for the three months ending June 30, 2021 and 2020.
Concentrations
On June 30,
2021 and December 31, 2020, one customer accounted for 100% of
accounts receivable. For the six months period ended June 30, 2021,
one customer accounted for 100% of total revenue. For the six
months period ended June 30, 2020, one customer accounted for 4% of
total revenue. Accounts receivable and revenue were all generated
from continuing operations for the six months ending June 30,
2021.
Inventory
Inventory
consists of raw materials owned by the Company and are stated at
the lower of cost or market. As of June 30, 2021 and December 31,
2020, the Company had $20,509 and $-0-; —respectively.
Property and
equipment
Property and
equipment are carried at cost less accumulated depreciation.
Depreciation is computed using straight-line method over the
estimated useful life. New assets and expenditures that extend the
useful life of property or equipment are capitalized and
depreciated. Expenditures for ordinary repairs and maintenance are
charged to operations as incurred. The Company’s property and
equipment relating to continuing operations consisted of the
following on June 30, 2021 and December 31, 2020, respectively, and
none related to discontinued operations.
Schedule of property and equipment relating to
continuing operations |
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2021 |
|
2020 |
Equipment of continuing operations |
|
$ |
154,809 |
|
|
$ |
134,788 |
|
Less: accumulated depreciation |
|
$ |
43,877 |
|
|
$ |
30,694 |
|
Property, Plant
and Equipment, Net |
|
$ |
110,932 |
|
|
$ |
104,094 |
|
For the six
months ended June 30, 2021 and 2020, the Company recognized
depreciation expense of $13,184
and
$5,124,
respectively.
In-Process Research and
Development (IPR&D)
The fair
value of IPR&D acquired through a business combination is
capitalized as an indefinite-lived intangible asset until the
completion or abandonment of the related research and development
activities. When the related research and development is completed,
the asset will be assigned a useful life
and amortized.
The fair
value of an IPR&D intangible asset is determined using an
income approach. This approach starts with a forecast of the net
cash flows expected to be generated by the asset over its estimated
useful life. The net cash flows reflect the asset’s stage of
completion, the probability of technical success, the projected
costs to complete, expected market competition, and an assessment
of the asset’s life-cycle. The net cash flows are then adjusted to
present value by applying an appropriate discount rate that
reflects the risk factors associated with the cash
flow streams.
The
development of IPR&D reached completion in April
2021.
Goodwill
Goodwill
represents the excess of the purchase price of acquired businesses
over the estimated fair value of the identifiable net assets
acquired. Goodwill is not amortized but is tested for impairment at
least annually at the reporting unit level or more frequently if
events or changes in circumstances indicate that the asset might be
impaired.
Goodwill is
tested for impairment annually or more frequently if events or
changes in circumstances between annual tests indicate that the
asset may be impaired. Impairment loss is recognized based on a
comparison of the fair value of the asset to its carrying value,
without consideration of any
recoverability.
Intangible
Assets
As required
by generally accepted accounting principles, trademarks and patents
are amortized if they have a definite life, the amortization is
estimated in straight line through three years starting in April
2021. The Company’s intangible assets relating to continuing
operations and discontinued operations consisted of the following
on June 30, 2021 and December 31, 2020, respectively.
Schedule of intangible assets |
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2021 |
|
2020 |
Goodwill |
|
$ |
2,458,233 |
|
|
$ |
2,458,233 |
|
Research in progress |
|
$ |
7,800,000 |
|
|
$ |
7,800,000 |
|
Finite-Lived
Intangible Assets, Gross |
|
$ |
10,258,233 |
|
|
$ |
10,258,233 |
|
|
|
|
|
|
|
|
|
|
Less: accumulated amortization |
|
$ |
641,096 |
|
|
$ |
— |
|
Intangible
Assets, Net (Including Goodwill) |
|
$ |
9,617,137 |
|
|
$ |
— |
|
Estimated
aggregate amortization expense for each of the three succeeding
years ending December 31 is as follows:
Estimated aggregate amortization
expense |
|
|
|
|
|
|
|
|
|
|
2021 |
|
2022 |
|
2023 |
|
2024 |
Amortization
expense |
|
$ |
1,951,779 |
|
|
$ |
2,600,000 |
|
|
$ |
2,600,000 |
|
|
$ |
648,221 |
|
Revenue
Recognition
The Company
follows the guidance contained in Topic 606 (FASB ASC 606). The
core principle of Topic 606 (FASB ASC 606) is that an entity should
recognize revenue to depict the transfer of goods of services to
customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or
services. The revenue recognition guidance contained in Topic 606,
to follow the five-step revenue recognition model along with other
guidance impacted by this standard: (1) identify the contract with
the customer; (2) identify the performance obligations in the
contract; (3) determine the transportation price; (4) allocate the
transportation price; (5) recognize revenue when or as the entity
satisfies a performance obligation. All revenue was from operations
that were divested.
Revenues are
recognized when title for goods is transferred; non-refundable fees
and proceeds from irrevocable agreements recognized when inflows or
other enhancements of assets of the Company are
received.
Revenues
from continuing operations recognized for three and six months
ended June 30, 2021 and 2020 amounted to $14,875, $47,524,
$0
and
$-0-,
respectively. Revenues from discontinued operations recognized for
three and six months ended June 30, 2021 and 2020 amounted to
$-0-,
$-0-,
and $7,990,
$15,130,respectively.
Grant
Income
In 2021 the
Company has received government grants to drive its research and
development efforts. Through these government grants, the
government has provided funding for the Company to perform research
and development activities which will assist in developing its
products. The Company believes the government entities funding
these grants are interested in the Company advancing its underlying
technologies through research activities and not providing
incentives for hiring employees or building facilities that would
suggest that the grant monies are not for specific research
activities.
In
determining how to classify the monies received under government
grants, the Company acknowledges that there is no specific guidance
under US GAAP and that the FASB and AICPA have often drawn upon the
guidance in IAS 20 for classification. In considering the
alternatives provided by IAS 20 for the presentation of these
grants in the Company’s financial statements, the Company believes
that recognizing the government grant proceeds as a component of
other revenue is a better reflection of the economics of the
arrangements as the Company earns the funding through the
performance of research and development which is not one of the
Company’s primary business activities or central to its operations.
The Company believes that presenting research and development
funding from government grants, as other revenue provides
consistency in our financial reporting. The Company also
believes that this presentation clearly presents to users of its
financial statements in one line the Company’s sources of funding
from these grants. The Company notes that there are no
contingencies associated with the receipt of or ability to retain
the funds under the grant, other than undertaking and performing
the related research and development activities.
The Company
recognizes funds received from contractual research and development
services and from government grants as other revenue. These
contracts and grants are not considered an ongoing major and
central operation of the Company’s business. Our Income from Grants
from Government for the three and six months ended June 30, 2021
and 2020 was $129,995,
$219,995
and $-0-,
$-0-
respectively.
Cost of
Sales
Cost of
sales includes the purchase cost of products sold and all costs
associated with getting the products to the customers including
buying and transportation costs. Cost of sales all related to
discontinued operations.
Shipping
Costs
Shipping and
handling costs billed to customers are recorded in sales. Shipping
costs incurred by the company are recorded in general and
administrative expenses. Shipping costs all related to discontinued
operations.
Fair Value
Measurements
The Company
applies the guidance that is codified under ASC 820-10 related to
assets and liabilities recognized or disclosed in the financial
statements at fair value on a recurring basis. ASC 820-10 defines
fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurements.
Convertible
Instruments
The Company
evaluates and accounts for conversion options embedded in its
convertible instruments in accordance with professional standards
for “Accounting for Derivative Instruments and Hedging
Activities.”
Professional
standards generally provide three criteria that, if met, require
companies to bifurcate conversion options from their host
instruments and account for them as free-standing derivative
financial instruments. These three criteria include circumstances
in which (a) the economic characteristics and risks of the embedded
derivative instruments are not clearly and closely related to the
economic characteristics and risks of the host contract, (b) the
hybrid instrument that embodies both the embedded derivative
instrument and the host contract is not re-measured at fair value
under otherwise applicable generally accepted accounting principles
with changes in fair value reported in earnings as they occur and
(c) a separate instrument with the same terms as the embedded
derivative instrument would be considered a derivative instrument.
Professional standards also provide an exception to this rule when
the host instrument is deemed to be conventional as defined under
professional standards as “The Meaning of “Conventional Convertible
Debt Instrument.”
The Company
accounts for convertible instruments (when it has determined that
the embedded conversion options should not be bifurcated from their
host instruments) in accordance with professional standards when
“Accounting for Convertible Securities with Beneficial Conversion
Features,” as those professional standards pertain to “Certain
Convertible Instruments.” Accordingly, the Company records, when
necessary, discounts to convertible notes for the intrinsic value
of conversion options embedded in debt instruments based upon the
differences between the fair value of the underlying common stock
at the commitment date of the note transaction and the effective
conversion price embedded in the note. Debt discounts under these
arrangements are amortized over the term of the related debt to
their earliest date of redemption. The Company also records when
necessary deemed dividends for the intrinsic value of conversion
options embedded in preferred shares based upon the differences
between the fair value of the underlying common stock at the
commitment date of the note transaction and the effective
conversion price embedded in the note.
ASC 815-40
provides that, among other things, generally, if an event is not
within the entity’s control could or require net cash settlement,
then the contract shall be classified as an asset or a
liability.
Income
Taxes
The Company
follows Section 740-10, Income tax (“ASC 740-10”) Fair Value
Measurements and Disclosures of the FASB Accounting Standards
Codification, which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns.
Under this method, deferred tax assets and liabilities are based on
the differences between the financial statement and tax bases of
assets and liabilities using enacted tax rates in effect for the
year in which the differences are expected to reverse. Deferred tax
assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets
will not be realized. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
the Statements of Operations in the period that includes the
enactment date.
The Company
recognizes deferred tax assets to the extent that the Company
believes that these assets are more likely than not to be realized.
In making such a determination, the Company considers all available
positive and negative evidence, including reversals of any existing
taxable temporary differences, projected future taxable income, tax
planning strategies, and the results of recent operations. If the
Company determines that it would be able to realize a deferred tax
asset in the future in excess of any recorded amount, the Company
would make an adjustment to the deferred tax asset valuation
allowance, which would reduce the provision for income
taxes.
The Company
adopted section 740-10-25 of the FASB Accounting Standards
Codification (“Section 740-10-25”). Section 740-10-25 addresses the
determination of whether tax benefits claimed or expected to be
claimed on a tax return should be recorded in the financial
statements. Under Section 740-10-25, the Company may recognize the
tax benefit from an uncertain tax position only if it is more
likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical
merits of the position. The tax benefits recognized in the
financial statements from such a position should be measured based
on the largest benefit that has a greater than fifty percent (50%)
likelihood of being realized upon ultimate settlement. Section
740-10-25 also provides guidance on de-recognition, classification,
interest and penalties on income taxes, accounting in interim
periods and requires increased disclosures. The Company had no
liabilities for unrecognized income tax benefits according to the
provisions of Section 740-10-25.
Concentrations of
Credit Risk
Financial
instruments and related items, which potentially subject the
Company to concentrations of credit risk, consist primarily of cash
and cash equivalents. The Company places its cash and temporary
cash investments with credit quality institutions. At times, such
amounts may be in excess of the FDIC insurance limit.
Net Loss per Common
Share
Net loss per
common share is computed pursuant to section 260-10-45 Earnings Per
Share (“ASC 260-10”) of the FASB Accounting Standards Codification.
Basic net loss per share is computed by dividing net loss by the
weighted average number of shares of common stock outstanding
during the period. Diluted net loss per share is computed by
dividing net loss by the weighted average number of shares of
common stock outstanding and the member potentially outstanding
during each period. In periods when a net loss is experienced, only
basic net loss per share is calculated because to do otherwise
would be anti-dilutive.
There were
30,335,782 common share equivalents
at June 30, 2021 and
32,556,727 common shares at
December 31, 2020. For the six months ended June 30, 2021 and 2020
these potential shares were excluded from the shares used to
calculate diluted earnings per share as their inclusion would
reduce net loss per share.
Stock Based
Compensation
All
stock-based payments to employees and to nonemployee directors for
their services as directors, including any grants of restricted
stock and stock options, are measured at fair value on the grant
date and recognized in the statements of operations as compensation
or other expense over the relevant service period. Stock-based
payments to nonemployees are recognized as an expense over the
period of performance. Such payments are measured at fair value at
the earlier of the date a performance commitment is reached, or the
date performance is completed. In addition, for awards that vest
immediately and are non-forfeitable the measurement date is the
date the award is issued. The
Company accounts for stock options issued to non-employees based on
the estimated fair value of the awards using the Black-Scholes
option pricing model in accordance
with ASC 505-50, Equity-Based Payment to
Non-employees. Stock-based compensation expense related to
stock options granted to non-employees is recognized as the stock
options vest. The Company believes that the fair value of the stock
options is more reliably measurable than the fair value of the
services received. Stock options granted to non-employees are
recorded at their fair value on the measurement date and are
subject to periodic adjustments as such options vest and at the end
of each reporting period, and the resulting change in value, if
any, is recognized in the Company’s statements of operations and
comprehensive loss during the period the related services are
rendered.
Cost of
Sales
Cost of
sales includes the purchase cost of products sold and all costs
associated with getting the products to the customers including
buying and transportation costs.
Research and
Development
The Company
accounts for research and development costs in accordance with the
Accounting Standards Codification subtopic 730-10, Research and
Development (“ASC 730-10”). Under ASC 730-10, all research and
development costs must be charged to expense as incurred.
Accordingly, internal research and development costs are expensed
as incurred. Third-party research and development costs are
expensed when the contracted work has been performed or as
milestone results have been achieved. Company-sponsored research
and development costs related to both present and future products
are expensed in the period incurred. For the three and six months
ended June 31, 2021 and 2020 the Company incurred research and
development expenses of $48,066,
$149,019
and
$121,437,
$126,292
from
continuing operations, respectively. For the three months ended
June 30, 2021 and 2020 the Company incurred research and
development expenses of $-0-, $-0- and $-0-, $-0- from discontinued
operations, respectively. The Company has entered into various
agreements with CROs. The Company’s research and development
accruals are estimated based on the level of services performed,
progress of the studies, including the phase or completion of
events, and contracted costs. The estimated costs of research and
development provided, but not yet invoiced, are included in accrued
liabilities on the balance sheet. If the actual timing of the
performance of services or the level of effort varies from the
original estimates, the Company will adjust the accrual
accordingly. Payments made to CROs under these arrangements in
advance of the performance of the related services are recorded as
prepaid expenses and other current assets until the services are
rendered.
Recently
Issued Accounting Standards
Accounting Standards
Implemented Since December 31, 2020
ASC Update
2021-04
Earnings Per
Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic
470-50), Compensation—Stock Compensation (Topic 718), and
Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40): Issuer’s Accounting for Certain Modifications or Exchanges
of Freestanding Equity-Classified Written Call Options (a consensus
of the FASB Emerging Issues Task Force)
The
amendments in this Update affect all entities that issue
freestanding written call options that are classified in equity.
Specifically, the amendments affect those entities when a
freestanding equity-classified written call option is modified or
exchanged and remains equity classified after the modification or
exchange. The amendments that relate to the recognition and
measurement of EPS for certain modifications or exchanges of
freestanding equity-classified written call options affect entities
that present EPS in accordance with the guidance in Topic 260,
Earnings Per Share. The amendments in this Update do not apply to
modifications or exchanges of financial instruments that are within
the scope of another Topic. That is, accounting for those
instruments continues to be subject to the requirements in other
Topics. The amendments in this Update do not affect a holder’s
accounting for freestanding call options.
ASC Update
No. 2020-10
In October
2020, the FASB issued ASC Update No. 2020-10, Codification
Improvements. Update No. 2020-10 amends a wide variety of Topics in
the Codification in order to improve the consistency of the
Codification and the application thereof, while leaving Generally
Accepted Accounting Principles unchanged.
ASC
Update No. 2020-06
In August 2020, the FASB issued ASC Update No. 2020-06, Debt - Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity. The amendments in Update No. 2020-06 simplify the
complexity associated with applying U.S. GAAP for certain financial
instruments with characteristics of liabilities and equity. More
specifically, the amendments focus on the guidance for convertible
instruments and derivative scope exception for contracts in an
entity’s own equity.
In November
2018, the FASB issued ASU 2018-18, Collaborative Arrangements
(Topic 818): Clarifying the Interaction Between Topic 808 and Topic
606, which clarifies when transactions between participants in
a collaborative arrangement are within the scope of the FASB’s
revenue standard, Topic 606. The standard is effective for fiscal
years beginning after December 15, 2019 and interim periods
within those fiscal years, with early adoption permitted. We
adopted this standard on its effective date of January 1,
2020. The adoption of this ASU did not have a material impact on
our consolidated financial position, results of operations, cash
flows, or presentation thereof. See Note15 for more information related
to the Company’s lease obligations.
In October
2018, the FASB issued ASU 2018-17, Targeted Improvements to
Related Party Guidance for Variable Interest Entities, that
changes the guidance for determining whether a decision-making fee
paid to a decision makers and service providers are variable
interests. The guidance is effective for fiscal years beginning
after December 15, 2019 and interim periods within those
fiscal years, with early adoption permitted. We adopted this
standard on its effective date of January 1, 2020. The
adoption of this ASU did not have a material impact on our
consolidated financial position, results of operations, cash flows,
or presentation thereof.
In August
2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and
Other-Internal-Use Software (Subtopic 350-40): Customer’s
Accounting for Implementation Costs Incurred in a Cloud Computing
Arrangement That is a Service Contract. ASU 2018-15 aligns the
requirements for capitalizing implementation costs incurred in a
hosting arrangement that is a service contract with the
requirements for capitalizing implementation costs incurred to
develop or obtain internal-use software. The standard is effective
for fiscal years beginning after December 15, 2019, including
interim periods within those fiscal years, with early adoption
permitted. We adopted this standard on its effective date of
January 1, 2020. The adoption of this ASU did not have a
material impact on our consolidated financial position, results of
operations, cash flows, or presentation thereof.
Other recent
accounting pronouncements issued by the FASB and the SEC did not or
are not believed by management to have a material impact on the
Company’s present or future consolidated financial
statements.
NOTE 6: PREPAID
EXPENSES
Prepaid
expenses consist of the following as of June 30, 2021 and December
31, 2020:
Schedule of Prepaid
Expenses |
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2021 |
|
2020 |
Prepaid insurance |
|
$ |
120,034 |
|
|
$ |
45,983 |
|
Prepaid services |
|
|
57,224 |
|
|
|
209,940 |
|
|
|
$ |
177,258 |
|
|
$ |
255,923 |
|
For the
three and six months ended June 31, 2021 and 2020, the Company
recognized amortization of prepaid expense of $105,353,
$34,108
and
$216,158,
$68,079,
respectively.
NOTE 7: PROMISSORY
NOTE
On August 8,
2014 the Company entered into a Promissory Note Agreement with
CanChew Biotechnologies, LLC (CCB), a related party (the owners of
CCB also own a majority of the outstanding shares of the Company),
under which it borrowed $1,000,000 to fund working capital.
The original loan was a demand note bearing interest at the rate of
7% per annum, which
amount, along with principal, was payable upon demand. The demand
note was amended effective January 1, 2015 to reduce the annual
interest rate to 3%. All other terms and conditions shall remain in
full force and effect. The Company is in discussions to have the
demand note modified or exchanged for a longer term, fixed maturity
note.
On May 6,
2020 (the “Effective Date”), AXIM Biotechnologies, Inc., a Nevada
corporation (the “Company”), entered into an Agreement (the
“Separation Agreement”). Pursuant to the Separation Agreement, the
Company transferred 100% of its interest in CanCo and CanChew to an
entity designated by Dr. Anastassov. In consideration for the
transfers set forth above, any and all indebtedness owed by the
Company to CanChew, totaling approximately $2.61 million, was
satisfied and paid in its entirety.
For the
three and six months ended June 30, 2021 and 2020, the Company
recognized interest expense of $59,576,
$119,908
and
$55,957,
$106,075,
respectively on this note all was related to discontinued
operations.
On December
31, 2019, Sapphire Biotech, Inc. had entered into a Debt Exchange
Agreement whereas the Company assumed three (3) loans totaling
$128,375
of Debt
owned by Sapphire Diagnostics, LLC which had an interest rate of
6% per annum. In the same
Debt Exchange Agreement, the Company assumed four (4) additional
loans made to Sapphire in 2019, which had an interest rate of 6%
per annum. All seven (7) loans totaling $310,000,
plus the aggregate interest accrued thereon of $14,218
making the
face value of the new note $324,218.
As of June 30, 2021 and December 31, 2020, the principal and
accrued interest balances were $353,452
and
$343,725,
respectively.
The Company
owes $5,000 to the chairman of the
board of the Company for a working capital advance of $5,000 made
in May of 2014, all was related to discontinued
operations.
Under an
agreement Mr. Changoer received on March 20, 2018 the Company
issued
50,000 restrictive shares of
its common stock and recorded $235,000
of
compensation expenses in the accompanying consolidated financial
statements to account for the issuance of the incentive shares. As
of June 30, 2021 and December 31, 2020, the total outstanding
balance was $20,000
and
$60,000
respectively
for consulting fees to Mr. Changoer included in accounts
payable.
On September
25, 2018, the Company amended Independent Director Compensation
agreement. Under the agreement in lieu of the share compensation
due to independent director of the Company for his annual service
ending May 23, Dr. Philip A. Van Damme shall receive cash
compensation of $20,000.
Started from August 1, 2019 the company has been paying monthly
clinical trial fee of $5,000. As of June 30, 2021
and December 31, 2020, the total outstanding balance was $10,000
and
$25,000,
respectively included in accounts payable.
Effective
January 1, 2019 the company entered into a thirty-months consulting
agreement with the chairman of the board which pays a monthly
consulting fee of $20,000. The company has also
been paying a monthly bonus fee of 15,000; this additional fee is
on a month-to-month basis at the discretion of management. As of
June 30, 2021 and December 31, 2020, the total outstanding balance
was $40,000
and
$225,000
respectively
for consulting fees included in accounts payable.
On May 6,
2020 (the “Effective Date”), AXIM Biotechnologies, Inc., a Nevada
corporation (the “Company”), entered into an Agreement (the
“Separation Agreement”) by and among the Company, CanChew License
Company (“CanCo”), CanChew Biotechnologies, LLC (“CanChew”),
Medical Marijuana, Inc., Dr. George A. Anastassov (“Dr.
Anastassov”), Dr. Philip A. Van Damme (“Dr. Van Damme”), Lekhram
Changoer (“Mr. Changoer”), Sanammad Foundation, Netherlands and
Sanammad Foundation, US (collectively, the “Sanammad Parties”),
pursuant to which, among other matters as described herein, Drs.
Anastassov and Van Damme and Mr. Changoer resigned as members of
the Company’s Board of Directors.
Pursuant to
the Separation Agreement, the Company transferred and assigned to
an entity designated by Dr. Anastassov all of the Company’s
cannabis-related intellectual property other than the inventions
and discoveries described in that certain cannabis-related patent
application filed by the Company’s wholly-owned subsidiary,
Sapphire Biotech, Inc. (water-soluble cannabinoid molecules). The
Company also transferred 100% of its interest in CanCo and CanChew
to an entity designated by Dr. Anastassov. In consideration for the
transfers set forth above, any and all indebtedness owed by the
Company to CanChew, totaling approximately $2.61 million, was
satisfied and paid in its entirety.
In addition,
in consideration for the payment by the Company of $65,000, the
Company purchased 100% of the issued and outstanding
500,000 shares of Series B
Preferred Stock held by the Sanammad Parties. Such shares shall be
retired to treasury of the Company. The Sanammad Parties also
agreed to forfeit and assign back to treasury, for no
consideration, a total of 18,570,356 shares of the Company’s common
stock.
In addition,
each of Drs. Anastassov and Van Damme and Mr. Changoer have agreed
to subject the shares of the Company’s common stock held by each of
them to lock-up and leak-out restrictions, as follows: they shall
not sell shares for a period of 12 months following the Effective
Date and, thereafter, subject to a daily volume limitation of 5%,
on an aggregate basis among them.
Further, the
Company terminated the Consulting Agreement of Dr. Anastassov and
the Employment Agreements for each of Dr. Van Damme and Mr.
Changoer. In connection with the termination of Dr. Anastassov’s
Consulting Agreement, the Company agreed to pay severance in the
amount of $35,000 for March 2020 and $20,000 per month thereafter
through July 2021 (the termination date contemplated by the
Consulting Agreement). Commencing for the April 2020, the Company
may, in its sole discretion, pay the $20,000 severance obligation
by the issuance of shares of the Company’s common stock registered
pursuant to the Registration Statement on Form S-8 filed with the
Commission on May 29, 2015 (“S-8 Shares”). If the gross cash
proceeds from the sale of any S-8 Shares issued in lieu of cash
severance is less than $20,000, as determined 20 days after
issuance of such S-8 Shares, then the Company has agreed to issue
additional shares that would serve to “true-up” the value of the
shares to the $20,000 monthly severance obligation; provided,
however, that if 30 days after the date the severance payment is
due the gross proceeds from the sale of S-8 Shares is less than
$20,000, the Company must pay the shortfall in cash. In addition,
for each month that Dr. Anastassov is entitled to receive
severance, he shall receive S-8 Shares in an amount equal to the
lesser of (a) 150,000 S-8 Shares, or (b) S-8 Shares valued at
$15,000 based upon the closing price of the Company’s common stock
as of the due date of the severance payment obligation. In
connection with the termination of the Employment Agreements of Dr.
Van Damme and Mr. Changoer, Mr. Changoer’s severance payments shall
be $20,000 per month for 12 months, commencing April 2020 (paid in
arrears) and Dr. Van Damme’s severance payments shall be $5,000 per
month for 12 months, similarly commencing April 2020 and paid in
arrears. The Company has the right to pay each of Dr. Van Damme’s
and Mr. Changoer’s monthly severance payments in S-8 shares in lieu
of cash subject to the same terms and restrictions (including
true-up terms) as set forth above for Dr. Anastassov. As of June
30, 2021, the accrued severance payment was $40,000 to Dr.
Anastassov, $20,000 to Mr. Changoer and $10,000 to Dr. Van Damme
included in accounts payable.
The Company
retains the right to prepay the severance obligations to Drs.
Anastassov and Van Damme and Mr. Changoer, without
penalty.
No claims
were alleged by the Company against any party, and no claims were
alleged against the Company. However, in connection with the
transactions described above, the parties entered into a general
mutual release of all claims.
NOTE 8: RELATED PARTY
TRANSACTIONS
Related
Party
The company
has an employment agreement with Catlina Valencia at a rate of
$15,000
per month
commencing March 17, 2020. The agreement can be terminated with 30
days’ notice by either party.
The company
has a consulting agreement with Glycodots LLC whereby it will
provide the services of Dr. Sergei A. Svarovsky at a rate of
$15,000
per month
commencing March 17, 2020. The agreement can be terminated with 30
days’ notice by either party.
Purchase of
Promissory Note and Forbearance Agreement
Effective
May 4, 2020, the Company acquired from TL-66, a California limited
liability company (“Seller”), a promissory note issued to Seller by
Dr. Anastassov (“Maker”) dated December 1, 2017, with a face value
of $350,000
and a
remaining balance due of approximately $100,000
(the
“Note”). The purchase price for the Note was $100,000 payable by
the Company issuing Seller One Million (1,000,000) restricted
shares of the Company’s Common Stock. Effective May 6, 2020, the
Company and Maker entered into a Forbearance Agreement whereby the
Company agreed to forbear from making any collection efforts on the
Note for a period of 24 months so long as Maker has not breached
the Separation Agreement. Following 24 months, if there has been no
breach of the Separation Agreement by Maker, repayment of the Note,
including all principal and unpaid interest, will be waived in
full. As of May, 4, 2020 the carrying value of the note receivable
was $102,567,
the value of the common stock to be issued was $135,000,
resulting in a loss of $32,433
accounted as
loss on debt extinguishment related to discontinued operations. The
balance of the Note Receivable as of June 30, 2021 and December 31,
2020 is $102,567
for both
periods, plus interest accrued thereon of $1,188
and
$675,
respectively.
NOTE 9:DUE TO FIRST
INSURANCE FUNDING
On June 25,
2020, the Company renewed its D&O insurance policy with total
premiums, taxes and fees for $93,357. A cash down payment of
$18,671 was paid on July 6, 2020. Under the terms of the insurance
financing, payments of $8,456, which include interest at the rate
of 4.6% per annum, are due each month for nine months commencing on
July 25, 2020.
On June 25,
2021, the Company renewed its D&O insurance policy with total
premiums, taxes and fees for $98,888. A cash down payment of
$24,273 was paid on July 7, 2021. Under the terms of the insurance
financing, payments of $1,797, which include interest at the rate
of 4.420% per annum, are due each month for nine months commencing
on July 25, 2021.
The total
outstanding due to First Insurance Funding as of June 30, 2021 and
December 31, 2020 is $98,888
and
$25,369,
respectively.
NOTE 10: CONVERTIBLE NOTES
PAYABLE
The
following table summarizes convertible note payable of related
party as of June 30, 2021 and December 31, 2020:
Schedule of Convertible Notes
Payable, Shareholder |
|
|
|
|
|
|
|
June 30, |
December 31, |
|
2021 |
2020 |
Convertible note payable, due on
November 1, 2026,
interest at
3.5% p.a. |
$ |
4,000,000 |
|
$ |
4,000,000 |
|
Accrued interest |
|
229,037 |
|
|
158,648 |
|
Convertible note payable, net |
$ |
4,229,037 |
|
$ |
4,158,648 |
|
In 2018 the
Company extinguished debt with Investor. Investor had proposed a
financing transaction pursuant to which the Company will satisfy
and retire the Original Note and Original Note current balance in
simultaneous exchange for and upon delivery by the Company of a (1)
new Convertible Promissory Note in the principal amount of
$4,000,000
(the
“Exchange Note”), and (2) 400,000 shares of the Company’s
restricted common stock (the “Origination Shares”).
Simultaneously, a
third-party Investor and the Company entered in Debt Exchange
Agreement with Medical Marijuana Inc. As part of this agreement
Investor will exchange and deliver the AXIM note to Medical
Marijuana in exchange for a Convertible Promissory note. Axim
consented to the transfer and assignment of the Axim Note in
exchange for the issuance by the Medical Marijuana of the Exchange
Note. The interest on this note is payable bi-annually every May 1
and November 1. On May 1, 2019 the Company paid accrued interest of
$60,278.
In 2020 the
Company was authorized to apply the accounts receivable of
$75,074
due from
Kannaway towards its accrued interest.
On May 1,
2020, the Company agreed to modify its existing convertible note
with a principal balance of $4 million, 3.5% interest rate
convertible note with the current holder of that note. There were
two changes to the existing agreement – (a) the conversion
price was reduced from the $1.50 conversion price in the original
Note to $0.25 cents in the modified Note and (b) the term of the
note was extended from the original maturity date of November 1,
2021, to November 1, 2026. The Company’s stock closed trading on
the day of the modification at $0.13 per share. The amendment of
this convertible Note was also evaluated under ASC
Topic 470-50-40, “Debt Modifications and
Extinguishments.” Based on the guidance, the instruments were
determined to be substantially different due to the change in the
conversion price being substantial, and debt extinguishment
accounting was applied. The fair value of the modified convertible
note was not different than the carrying value of the original note
as such no extinguishment loss was recorded, The Note prior to the
amendment of approximately $4 million, and the fair value of
the Note and embedded derivatives after the amendment of
approximately $4 million. There were no unamortized debt
issuance costs and the debt discount associated with the original
2018 Note.
For the three and six month ended June 30, 2021 and 2020, interest
expenses was $35,389, $35,389,
$70,389
and $70,389,
respectively.
As of June
30, 2021 and December 31, 2020, the balance of secured convertible
note was $4,229,037
and
$4,158,648
which
included $229,037
and
$158,648
accrued
interest, respectively.
The
following table summarizes convertible note payable as of June 30,
2021 and December 31, 2020:
Schedule of Convertible Note
Payable of Related Party |
|
|
|
|
|
|
|
June 30, |
December 31, |
|
2021 |
2020 |
Convertible note payable, due on October 1, 2029,
interest at 3.5% p.a. |
$ |
484,478 |
|
$ |
484,478 |
|
Convertible note payable, due on October 1, 2029,
interest at 3.5% p.a. |
|
500,000 |
|
|
1,000,000 |
|
Convertible note payable, due on December 31,
2034, interest at 3% p.a. |
|
190,000 |
|
|
190,000 |
|
Convertible note payable, due on July 21, 2032,
interest at 3.5% p.a. |
|
609,835 |
|
|
609,835 |
|
Accrued interest (The accrued interest and
principal are both included in the captions titled “convertible
note payable” in the balance sheet) |
|
192,521 |
|
|
236,148 |
|
Total |
|
1,976,834 |
|
|
2,520,461 |
|
Less: unamortized debt discount/finance premium
costs |
|
(640,552 |
) |
|
(843,673 |
) |
Convertible note payable, net |
$ |
1,336,282 |
|
$ |
1,676,788 |
|
On September
16, 2016, we entered into a convertible note purchase agreement
(the “Convertible Note Purchase Agreement” or “Agreement”) with a
third-party investor. Under the terms of the Convertible Note
Purchase Agreement the investor may acquire up to $5,000,000 of
convertible notes from the Company. With various closings, under
terms acceptable to the Company and the investor as of the time of
each closing. Pursuant to the Agreement, on September 16, 2016 the
investor provided the Company with $850,000 secured convertible
note financing pursuant to four (4) Secured Convertible Promissory
Notes (the “Notes”). Each of the Notes matures on October 1, 2029,
and pay 3.5% compounded interest paid bi-annually. The Note are
secured by the assets of the Company, may not be pre-paid without
the consent of the holder, and are convertible at the option of the
holder into shares of the Company common stock at a conversion
price equal to $0.2201 per share.
As of June
30, 2021 and December 31, 2020, the balance of secured convertible
notes was $564,945
and
$556,420,
which included $80,467
and
$71,942
accrued
interest, respectively.
On October
20, 2016 a third-party investor provided the Company with
$1,000,000 secured convertible note financing pursuant to three (3)
Secured Convertible Promissory Notes (the “Notes”). Each of the
Notes mature on October 1, 2029 and pay 3.5% compounded interest
paid bi-annually. The Notes are secured by the assets of the
Company, may not be pre-paid without the consent of the holder, and
are convertible at the option of the holder into shares of the
Company’s common stock at a fixed conversion price equal of $0.2201
per share. The investor paid cash of $500,000 for one of the Notes
and issued to the Company two (2) secured promissory notes of
$250,000 each for two (2) Convertible Notes of $250,000 each. The
two secured promissory notes issued by the investor (totaling
$500,000) as payment for two (2) secured Notes totaling $500,000
mature on February 1, 2017 ($250,000) and March 1, 2017 ($250,000),
bear interest at the rate of 1% per annum, are full recourse and
additionally secured by 10,486,303 shares of Medical Marijuana,
Inc. (Pink Sheets symbol: MJNA) and were valued at $858,828 based
upon the closing price of MJNA on October 20, 2016. A debt discount
was recorded related to beneficial conversion feature inn
connection with this convertible note of $499,318, related to the
beneficial conversion feature of the note to be amortized over the
life of the note or until the note is converted or repaid. As of
June 30, 2021 and December 31, 2020, this note has not been
converted and the balance of secured convertible notes was
$583,270
and
$1,148,944,
which included $83,270
and
$148,944
accrued
interest, respectively.
On June 7,
2021 the Company converted $500,000 of the Convertible Note with
TL-66-LLC along with the accrued interest of $82,707 into 2,647,464
shares of the Company’s common stock at $0.2201 per share which
resulted in a loss on extinguishment of debt of $1,535,264.
On December
31, 2019, Sapphire Biotech, Inc. entered into a Convertible Note
Purchase Agreement whereas the Company issued a convertible note
with a face value of $190,000 with a compounding interest rate of
3% per annum, the interest shall be payable annually beginning on
December 31, 2020 until the maturity date of December 31, 2034, at
which time all principal and interest accrued thereon shall be due
and payable. The Convertible Note is secured by substantially all
the Company’s tangible and intangible assets. In addition, the
Convertible Note includes various non-financial covenants including
the Company may not enter into any agreement, arrangement or
understanding of any kind that would result in a transaction, or
series of transactions, that would result in the sale of 50% or
more of the Company’s capital stock without the prior approval of
the holder.
Upon
issuance, the Convertible Note was convertible into shares of the
Company’s common stock at $1.90 per share. At December 31, 2019,
the Company determined that the Convertible Note contained a
beneficial conversion feature for which a full discount was
recorded on the Convertible Note. The fair market value of the
Company’s common stock was based upon the estimated per share
acquisition price per the pending acquisition of the Company. The
discount of $190,000 will be amortized using the effective interest
method and will be fully amortized by December 31, 2034.
On March 17,
2020 the Company entered into a Share Exchange Agreement
(“Agreement”) with Sapphire Biotech, Inc., a Delaware corporation
(“Sapphire”) and all of the Sapphire stockholders (collectively,
the “Sapphire Stockholders”). Following the closing of the
transaction, Sapphire will become a wholly owned subsidiary of
AXIM. Under the terms of the Agreement, the Company intends to
assume the convertible notes in the principal amounts of $190,000.
After the acquisition, the Convertible Note was able to convert
6,000,000 shares of Axim’s common
stock. Upon assumption of the note, the Company recorded a
beneficial conversion feature of $190,000.
As of June 30, 2021 and December 31, 2020, the balance of secured
convertible note was $198,566
and
$195,716,
which included $8,566
and
$5,716
accrued
interest, respectively.
On July 21,
2020 the Company entered into convertible note purchase agreement
with Cross & Company, the Company owed to Cross & Company
$609,835 of aggregated payments and desired to satisfy the amount
due in full by issuing to Cross & Company a convertible
promissory note. The convertible note matures on July 21, 2032 and
incurred 3.5% compounded interest paid annually. The Note are
secured by the assets of the Company, may not be pre-paid without
the consent of the holder, and are convertible at the option of the
holder into shares of the Company common stock at a conversion
price equal to $0.37. Notwithstanding the foregoing, holder shall
not be permitted to convert the note, or portion thereof, if such
conversion would result in beneficial ownership by holder and its
affiliates of more than 4.9% of the debtor’s outstanding common
stock as of the date of conversion. The Company determined that
that the conversion of the amounts due into a long-term convertible
note resulted in a debt extinguishment due to the change in the
fair values exceeding 10%. Accordingly, the loss of $823,497 was
included in the statement of operations as loss on debt
extinguishment. As of June 30, 2021 and December 31, 2020, the
balance of secured convertible note was $630,053
and
$619,381,
which included $20,218
and
$9,546
accrued
interest respectively.
During the
three and six months ended June 30, 2021 and 2020, the Company
amortized the debt discount on all the notes of $181,295,
$203,122
and
$22,071,
$41,432,
respectively, to other expenses. As of June 30, 2021 and December
31, 2020, unamortized debt discount was $640,552
and
$843,673,
respectively.
NOTE 11: STOCK INCENTIVE
PLAN
On May 29,
2015 the Company adopted its 2015 Stock Incentive Plan. Under the
Plan the Company may issue up to 10,000,000 S-8 shares to officers,
employees, directors or consultants for services rendered to the
Company or its affiliates or to incentivize such parties to
continue to render services. S-8 shares are registered immediately
upon the filing of the Plan and are unrestricted shares that are
free-trading upon issuance. As of June 30,2021 December 31, 2020
there were 13,033,335
and
9,806,000 shares available for
issuance under the Plan. The Company recorded compensation expense
of $91,526,
$191,266
and
$-0-,
$-0
-during the three and six
months ended June 31, 2021 and 2020.
On May 13,
2020, Alim Seit-Nebi the Chief Technology Officer and Co-Founder of
Sapphire Biotechnology was granted the options to purchase 1
million shares of Axim common stock under the plan at the exercise
price of $0.126 per share. One third of the options will vest six
months from the date of grant, one third of the options will vest
one year from the date of grant, and the remaining one third of the
options will vest two years from the date of grant.
On May 13,
2020, Dr. Douglas Lake the Chief Clinical Officer and Co-Founder of
Sapphire Biotechnology was granted the options to purchase 2
million shares of Axim common stock under the plan at the exercise
price of $0.126 per share. One third of the options will vest six
months from the date of grant, one third of the options will vest
one year from the date of grant, and the remaining one third of the
options will vest two years from the date of grant.
On May 13,
2020, Timothy R, Scott the Director of Axim Biotechnology was
granted the options to purchase 0.5 million shares of Axim common
stock under the plan at the exercise price of $0.126 per share. One
third of the options vested immediately, one third of the options
will vest six months from the date of grant, and the remaining one
third of the options will vest twelve months from the date of
grant.
On May 13,
2020, Robert Cunningham the Director of Axim Biotechnology was
granted the options to purchase 0.5 million shares of Axim common
stock under the plan at the exercise price of $0.126 per share. One
third of the options vested immediately, one third of the options
will vest six months from the date of grant, and the remaining one
third of the options will vest twelve months from the date of
grant.
On May 13,
2020, Maurico Bellora the Director of Axim Biotechnology was
granted the options to purchase 0.5 million shares of Axim common
stock under the plan at the purchase price of $0.126 per share. One
third of the options vested immediately, one third of the options
will vest six months from the date of grant, and the remaining one
third of the options will vest twelve months from the date of
grant.
On September
10, 2020, Noel C. Gillespie the Senior Patent Attorney of Axim
Biotechnology was granted the options to purchase 0.5 million
shares of Axim common stock under the plan at the purchase price of
$0.61 per share. One third of the options vested immediately, one
third of the options will vest one year from the date of grant, and
the remaining one third of the options will vest two years from the
date of grant.
For the
three and six months ended June 30, 2021 and 2020 the Company
recorded compensation expense of $91,526, $191,266
and
$-0-,
$-0- respectively.
NOTE 12: STOCKHOLDERS’
DEFICIT
Preferred
Stock
The Company
has authorized
5,000,000 shares of preferred
stock, with a par value of $0.0001
per share.
Of the 5,000,000 authorized preferred shares, 4,000,000
are
undesignated “blank check” preferred stock. The Company may issue
such preferred shares and designate the rights, privileges and
preferences of such shares at the time of designation and issuance.
As of June 30, 2021, and December 31, 2020 there are -0-
and -0-
shares of undesignated preferred shares issued and outstanding,
respectively.
There are
zero shares issued and outstanding of Series A and Series B
Preferred stock as of June 30, 2021.
Series C
Convertible Preferred Stock
On August
17, 2016 the Company designated up to
500,000 shares of a new Series C
Convertible Preferred Stock (Series C Preferred Stock). The holders
of the Series C Preferred are entitled to elect four members to the
Company’s board of directors and are entitled to cast 100 votes per
share on all other matters presented to the shareholders for a
vote. Each share of Series C Convertible Preferred is convertible
into one share of the Company’s common stock. The Series C
Convertible Preferred designation contains a number of protective
and restrictive covenants that restrict the Company from taking a
number of actions without the prior approval of the holders of the
Series C Preferred or the unanimous vote of all four Series C
Directors. If at any time there are four Series C Directors, one
such director must be independent as that term is defined in the
Series C designation. Any challenge to the independence of a Series
C Director is a right conferred only upon the holders of the Series
B Convertible Preferred Stock and may only be made by the holders
of the Series B Convertible Preferred Stock.
On August
18, 2016 the Company issued all
500,000 shares of its newly
designated Series C Preferred Stock to MJNA Investment Holdings,
LLC in exchange for cash of $65,000. As the holders of the
Series C Preferred Stock, MJNA Investment Holdings, LLC has
designated Dr. Timothy R. Scott, John W. Huemoeller II, Robert
Cunningham and Blake Schroeder as their four Series C
Directors.
On February
20, 2019, MJNA Investment Holdings LLC (“Seller”) sold its 500,000
shares of AXIM Biotechnologies, Inc.’s, a Nevada corporation (the
“Company”) Series C Preferred Stock to Juniper & Ivy
Corporation, a Nevada corporation (“Purchaser”) for a purchase
price of $500,000 (the “Purchase Price”)
pursuant to a Preferred Stock Purchase Agreement (the “Purchase
Agreement”). Payment of the Purchase Price was made as follows (i)
a $65,000 payment made by check payable to Seller, which Purchaser
borrowed from an unrelated third-party and which has no recourse
against the Series C Preferred Stock or assets of Purchaser (the
“Loan”), and (ii) the issuance by Purchaser to Seller of a
promissory note, face value, $435,000,
which has no recourse against the Series C Preferred Stock or
assets of Purchaser (the “Note”). The Company’s Chief Executive
Officer John W. Huemoeller II is the President of Purchaser. Mr.
Huemoeller provided a personal guaranty for the Loan and the
Note.
The holders
of the Series C Preferred Stock are entitled to elect four members
to the Company’s Board of Directors and are entitled to cast 100
votes per share on all other matters presented to the shareholders
for a vote. As a result of this transaction, a change in control
has occurred.
Effective
April 2, 2019, Blake N. Schroeder resigned as a member of the
Company’s Board of Directors. Mr. Schroeder’s resignation was not
because of any disagreements with the Company on matters relating
to its operations, policies and practices.
On April 3,
2019 pursuant to the Company’s Amended and Restated Bylaws, the
holder of the Company’s Series C Preferred Stock appointed Mauricio
Javier Gatto-Bellora to fill the director seat vacated by the
resignation of Mr. Schroeder.
On July 21,
2020 pursuant to the Company’s Amended and Restated Bylaws, the
holder of the Company’s Series C Preferred Stock appointed Peter
O’Rourke to fill one of the vacant positions on board created by
the resignations of Dr. George Anastassov, Lekhram Changoer, and
Dr. Philip Van Damme.
Common Stock
and Common Stock Warrants
Common
Stock
The Company
has authorized
300,000,000 shares of common stock,
with a par value of $0.0001 per share. As of June 30, 2021, and
December 31, 2020, the Company had
133,024,435 and
125,327,579 shares of common stock
issued and outstanding, respectively.
2021
Transactions:
Common
Stock
On May 14,
2021, The Company entered into the Equity Purchase Agreement with
Cross, pursuant to which we have the right to “put,” or sell, up to
$10,000,000 worth of shares of our common stock to Cross. As
provided in the Equity Purchase Agreement, we may require Cross to
purchase shares of our common stock from time to time by delivering
a put notice to Cross specifying the total number of shares to be
purchased (such number of shares multiplied by the purchase price
described below, the “Investment Amount”); provided there must be a
minimum of ten trading days between delivery of each put notice. We
may determine the Investment Amount, provided that such amount may
not be more than 500% of the average daily trading volume in dollar
amount for our common stock during the five trading days preceding
the date on which we deliver the applicable put notice, unless
waived by Cross in its sole discretion. Additionally, such amount
may not be lower than $10,000 or higher than $1,000,000. Cross will
have no obligation to purchase shares under the Equity Line to the
extent that such purchase would cause Cross to own more than 4.99%
of our issued and outstanding shares of common stock.
In June 2021
the company issued
500,000 restricted shares of its
common stock valued at $332,500
pursuant to
S-1 Agreement to third party for certain services, recorded as
subscription receivable.
During
April, May and June 2021 the company issued
2,647,464 restricted shares of its
common stock valued at $582,707
pursuant to
conversion of convertible note (Note 10) with a loss of
extinguishment of debt $1,535,264.
During
April, May and June 2021 the Company issued
1,234,113 shares for cash of gross
proceed of $402,500
pursuant to
various Warrant Stock purchase agreements. The cash was received in
the second quarter ending 2021. Out of these 519,828 shares of
common stock valued at $152,500 was adjusted with common stock to
be issued of prior period. The company also issued warrants to
purchase 175,000 shares of common stock at an exercise price of
$0.75 and 714,285 shares of common stock at an exercise price of
$0.80. Warrants are exercisable within a 3 year period from
issuance.
During
April, May and June 2021 the company issued
1,114,351 restricted shares of its
common stock valued at $792,389
to third
parties for certain services, recorded as consulting
fees.
During March
2021 the Company issued
1,712,500 shares for cash of gross
$434,000
pursuant to
various Stock purchase agreements. The cash was received in the
first quarter ending 2021.The company also issued warrants to
purchase 900,000 shares of common stock
at an exercise price of $0.75.
Warrants are exercisable within a
3 year period from
issuance.
Company paid
finders fees of $20,000 in cash during this period for capital
raise and will also issue shares equaling $16,000 in market value,
which was issued during the three months ended June 30,
2021.
On March 18,
2021 the company issued
488,428 restricted shares of its
common stock valued at $291,974
to third
parties for certain services, recorded as consulting fees. Out of
these 108,965 shares of common stock valued at $66,974 was adjusted
with common stock to be issued of prior year.
2020
Transactions:
During the
period between January 1, 2020 and December 31, 2020 the Company
issued total 17,292,751 shares valued $3,309,130 pursuant to the
Company’s Registration Statement on Form S-3. The Company received
$3,309,130 in cash.
On January
13, 2020 the Company issued
250,000 restricted shares of its
common stock to third party valued at $50,000,
which were carried on the books as stock to be issued.
On January
23, 2020 and February 26, 2020 the Company issued
600,000, and
62,839 restricted shares of its
common stock to third party valued at $262,500,
and $25,000
pursuant to
the stock purchase agreement for certain services, recorded as
advertising and promotion expense and License, permits &
Patents, respectively.
On March 17,
2020 the company acquired 100% of the issued and outstanding shares
of Sapphire by means of a share exchange with the Sapphire
Stockholders in exchange for
54,000,000 restricted shares of its
common stock at valued $7,506,000.
On April 21,
2020 the Company issued
1,176,470 restricted shares of its
common stock to third party valued at $100,000
pursuant to
the stock purchase agreement. The cash was received in
2020.
On May 6,
2020, the Company entered into an agreement with Sanammad
Foundation, the Sanammad Parties agreed to forfeit and assign back
to treasury, for no consideration, a total of
18,570,356 shares of the Company’s
common stock, for which the fair value was $2,562,709,
however for accounting purpose this transaction recording at par
value adjustment to additional paid in capital. This transaction is
related to the divesture of the previous operations to
Sanammad.
On May 22,
2020 the Company issued 190,810
and 286,215
S-8 shares valued at $60,000 and $90,000
pursuant to
the Company’s Registration Statement on Form S-8 for severance
fees.
On June 10,
2020 and June 24, 2020 the Company issued
2,173,913 and
625,000 restricted shares of its
common stock to third party valued at $500,000
and
$100,000
pursuant to
the stock purchase agreement. The cash was received in 2020,
respectively.
On July 1,
2020 the Company issued
185,185 and
370,370 restricted shares of its
common stock to third party valued at $25,000
and
$50,000
pursuant to
the stock purchase agreement. The cash was received in 2020,
respectively.
On July 2,
2020 and July 9, 2020 the Company issued
714,285 and
1,785,714 restricted shares of its
common stock to third party valued at $100,000
and
$250,000
pursuant to
the stock purchase agreement. The cash was received in 2020,
respectively.
On July 10,
2020 the Company issued
5,141,377 restricted shares of its
common stock in exchange for the conversion of $51,414
of a
convertible note payable, which included $6,414 in
interest.
On July 10,
2020 the Company issued
142,857 and
357,153 restricted shares of its
common stock to third party valued at $20,000
and
$50,000
pursuant to
the stock purchase agreement. The cash was received in 2020,
respectively.
On July 10,
2020 the Company issued
250,000 and
107,143 restricted shares of its
common stock to third party valued at $35,000
and
$15,000
pursuant to
the stock purchase agreement. The cash was received in 2020,
respectively.
On July 14,
2020 the Company issued
200,000 restricted shares of its
common stock to third party valued at $23,630
pursuant to
the stock purchase agreement. The cash was received in 2020,
respectively.
On July 21,
2020 the Company entered into convertible note purchase agreement
with Cross & Company, the Company owed to Cross & Company
$609,835
of
aggregated True-Up payments due to subscription price adjustment
and desired to satisfy the amount due in full by issuing to Cross
& Company a convertible promissory note (see note
10).
On July 22,
2020 the Company issued
65,359 and
130,719 restricted shares of its
common stock to third party valued at $20,000
and
$40,000
pursuant to
the stock purchase agreement. The cash was received in 2020,
respectively.
On July 22,
2020 the Company issued
163,398 and
326,797 restricted shares of its
common stock to third party valued at $50,000
and
$100,000
pursuant to
the stock purchase agreement. The cash was received in 2020,
respectively.
On July 22,
2020 the Company issued
816,993 and
65,359 restricted shares of its
common stock to third party valued at $250,000
and
$20,000
pursuant to
the stock purchase agreement. The cash was received in 2020,
respectively.
On July 24,
2020 359,524
shares for
the purchase of prepaid marketing expenses valued at $302,000
On August 4,
2020 the Company issued
141,243 restricted shares of its
common stock to third party valued at $50,000
pursuant to
the stock purchase agreement. The cash was received in
2020.
On August 6,
2020 the Company issued 148,166
and
166,686 S-8 shares valued at
$120,000
and
$135,000
pursuant to
the Company’s Registration Statement on Form S-8 for severance
fees.
On August
12, 2020 the Company issued
414,419 restricted shares of its
common stock to third party valued at $76,690
pursuant to
the stock purchase agreement for certain services, recorded as
commission fees.
On December
7, 2020 the Company issued
130,609 S-8 shares of its common
stock to third party value at $75,000
pursuant to
the Company’s Registration Statement on Form S-8 for severance
fees.
NOTE 13: STOCK
OPTIONS
Options to purchase common stock are granted at the discretion of
the Board of Directors, a committee thereof or, subject to defined
limitations, an executive officer of the Company to whom such
authority has been delegated. Options granted to date generally
have a contractual life of ten years.
The stock
option activity for six months ended June 30, 2021 and the year
ended December 31, 2020 is as follows:
Schedule of Stock option
activity |
|
|
|
|
|
|
|
|
|
|
Options
Outstanding
|
|
Weighted
Average
Exercise
Price
|
Outstanding at
December 31, 2019 |
|
|
2,000,000 |
|
|
$ |
0.75 |
|
Granted |
|
|
8,300,000 |
|
|
|
0.27 |
|
Exercised |
|
|
— |
|
|
|
— |
|
Expired
or canceled |
|
|
— |
|
|
|
— |
|
Outstanding at December 31,
2020 |
|
|
10,300,000 |
|
|
|
0.36 |
|
Granted |
|
|
— |
|
|
|
— |
|
Exercised |
|
|
— |
|
|
|
— |
|
Expired
or canceled |
|
|
(2,000,000 |
) |
|
|
0.75 |
|
Outstanding at June 30,
2021 |
|
|
8,300,000 |
|
|
$ |
0.36 |
|
The
following table summarizes the changes in options outstanding,
option exercisability and the related prices for the shares of the
Company’s common stock issued to employees and consultants under a
stock option plan at June 30, 2021 and December 31,2020: 2,000,000 options issued to John
Huemoeller were canceled to allow for issuances to other
employees.
As of
June 31, 2021
Schedule of options under Stock
Option Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Outstanding |
|
|
|
|
|
|
|
|
|
Options Exercisable |
|
|
|
|
|
Weighted
Average
Exercise
Price
($)
|
|
|
Number
Outstanding
|
|
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
|
|
|
Weighted
Average
Exercise
Price
($)
|
|
|
Number
Exercisable
|
|
|
Weighted
Average
Exercise
Price
($)
|
|
$ |
0.36 |
|
|
8,300,000 |
|
|
9.5 |
|
|
$ |
0.36 |
|
|
6,966,665 |
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
December 31, 2020
|
|
|
|
Options Outstanding |
|
|
|
|
|
|
|
|
|
Options Exercisable |
|
|
|
|
|
Weighted
Average
Exercise
Price
($)
|
|
|
Number
Outstanding
|
|
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
|
|
|
Weighted
Average
Exercise
Price
($)
|
|
|
Number
Exercisable
|
|
|
Weighted
Average
Exercise
Price
($)
|
|
$ |
0.36 |
|
|
10,300,000 |
|
|
9.8 |
|
|
$ |
0.36 |
|
|
7,466,662 |
|
$ |
0.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company
determined the value of share-based compensation for options vested
using the Black-Scholes fair value option-pricing model with the
following weighted average assumptions:
Schedule of assumptions to
determine value of share-based compensation for options |
|
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2021 |
|
2020 |
Expected life (years) |
|
|
10 |
|
|
|
10 |
|
Risk-free interest rate (%) |
|
|
1.74 |
|
|
|
0.61 |
|
Expected
volatility (%) |
|
|
190 |
|
|
|
230 |
|
Dividend
yield (%) |
|
|
— |
|
|
|
— |
|
Weighted average fair value of
shares at grant date |
|
$ |
1.74 |
|
|
$ |
0.61 |
|
For the three months ended June 30, 2021 and 2020 stock-based
compensation expense related to vested options was $91,526 and
$0,
respectively.
For the six
months ended June 30, 2021 and 2020 stock-based compensation
expense related to vested options was $191,266
and
$0,
respectively.
NOTE 14: DISCONTINUED
OPERATIONS
During May
2020 the Company decided to discontinue most of its operating
activities pursuant to the Separation Agreement entered into by and
among the Company, CanChew License Company (“CanCo”), CanChew
Biotechnologies, LLC (“CanChew”), Medical Marijuana, Inc., Dr.
George A. Anastassov (“Dr. Anastassov”), Dr. Philip A. Van Damme
(“Dr. Van Damme”), Lekhram Changoer (“Mr. Changoer”), Sanammad
Foundation, Netherlands and Sanammad Foundation, US (collectively,
the “Sanammad Parties”). (see Note 1)
Pursuant to
the terms of the Purchase Agreement dated as of May 6, 2020,
Sanammad Parties agreed to acquire from the Company substantially
all of its assets and its wholly-owned subsidiaries and to assume
certain liabilities and its wholly-owned subsidiaries. Sanammad
Parties agreed to pay a purchase price of $2,609,100 reflected in
amount due Canchew were deemed paid in full. The sale, which was
completed on May 6, 2020, did not include the Company’s cash and
certain other excluded assets and liabilities.
The assets
sold and liabilities transferred in the transaction were the sole
revenue generating assets of the Company. The results of operations
associated with the assets sold have been reclassified into
discontinued operations for periods prior to the completion of the
transaction.
The
following is a summary of assets and liabilities sold, stock
retired and gain recognized, in connection with the sale of assets
to Sanammad parties:
Schedule of Discontinued
Operations - Summary of assets and liabilities sold |
|
|
|
|
Other current assets |
|
$ |
5,000 |
|
Total
current assets |
|
$ |
510,017 |
|
Intangible assets, net of
amortization |
|
$ |
47,375 |
|
Total
asset |
|
$ |
562,392 |
|
|
|
|
|
|
Notes
payable |
|
$ |
880,000 |
|
Accounts
payable and accrued expenses |
|
$ |
210,640 |
|
Due to
Canchew |
|
$ |
1,526,603 |
|
Stock
retired |
|
$ |
1,857 |
|
Total
liabilities and equity |
|
$ |
2,619,100 |
|
|
|
|
|
|
The gain
on sale of assets was reported during the period was determined as
follows: |
|
|
|
|
Loss on
sale of assets |
|
$ |
562,392 |
|
Gain on
sale of liabilities |
|
$ |
2,619,100 |
|
|
|
|
|
|
Net gain
from sale of assets and liabilities |
|
$ |
2,056,708 |
|
The
resulting gain from the sale will be fully offset by existing net
operating loss carryforwards available to the Company.
For the six
months ended June 30, 2021 and 2020 the Company recognized interest
expense of $-0- and $-0-,
respectively.
Additionally, the
operating results and cash flows related to assets sold on May 06,
2020 are included in discontinued operations in the consolidated
statements of operations and consolidated statements of cash flows
for the twelve months ended December 31, 2020 and 2019.
As of June
30, 2021 and 2020, the Company has nil asset and liabilities of the
discontinued operations in the unaudited condensed consolidated
balance sheet in accordance with the provision of ASC
205-20.
Loss from
Discontinued Operations
The sale of
the majority of the assets and liabilities related to the Sanammad
parties represents a strategic shift in the Company’s business. For
this reason, the results of operations related to the assets and
liabilities held for sale for all periods are classified as
discontinued operations.
The
following is a summary of the results of operations related to the
assets and liabilities held for sale (discontinued operations) for
the six months ended June 30, 2021 and 2020:
Summary of Results of Discontinued
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
2021
|
|
June
30,
2020
|
Net sales |
|
$ |
— |
|
|
$ |
5,097 |
|
Total
expenses |
|
$ |
(4,633 |
) |
|
$ |
(2,321,852 |
) |
Gain
from sale of asset and liability |
|
$ |
— |
|
|
$ |
2,046,708 |
|
Other
loss (income) |
|
$ |
— |
|
|
$ |
(87,383 |
) |
Loss
from discontinued operations |
|
$ |
(4,633 |
) |
|
$ |
(357,430 |
) |
The
following is a summary of net cash provided by or used in operating
activities, investing activities and financing activities for the
assets and liabilities held for sale (discontinued operations) for
the six months ended June 31, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
June
30,
2021
|
|
June
30,
2020
|
Income (loss) from discontinued
operations |
|
$ |
(4,633 |
) |
|
$ |
(357,430 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment of non-cash activities |
|
|
— |
|
|
|
(1,809,325 |
) |
Decrease
in accounts receivable |
|
|
— |
|
|
|
315,684 |
|
Increase
in inventory |
|
|
— |
|
|
|
(22,203 |
) |
Increase
in accounts payable and accrued expenses |
|
|
— |
|
|
|
1,075,335 |
|
Net cash provided by (used in) operating
activities |
|
$ |
(4,633 |
) |
|
$ |
(797,939 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing
activities |
|
$ |
— |
|
|
$ |
— |
|
Net cash provided by (used in) financing
activities |
|
$ |
— |
|
|
$ |
— |
|
NOTE 15: COMMITMENT AND
CONTINGENCIES
On January
2, 2019 the Company entered into the term of Executive’s employment
agreement, at a base salary of $10,000 per month with John W.
Huemoeller II to serve as its Chief Executive Officer. The Company
and Executive acknowledge and agree that Executive’s employment
hereunder shall at all times be “at will,” which means that either
Executive may resign at any time for any reason or for no reason,
and that the Company may terminate Executive’s employment at any
time for any reason or for no reason, in either case, subject to
the applicable provisions of this Agreement. In further
consideration for Executive’s services and subject to the approval
of the Board, Executive will be granted an option to purchase
2,000,000 shares of the Company’s common stock (the “Option
Shares”). The option will be subject to the terms and conditions
applicable to stock options granted under the Company’s 2015 Stock
Incentive Plan, as amended from time to time (the “Plan”), and as
described in the Plan and the stock option agreement, which
Executive will be required to sign. 50% of the Option Shares shall
vest on the date of grant and the remaining 50% of the Option
Shares shall vest on the 12- month anniversary of the grant date,
subject to Executive’s continued employment by the Company. The
exercise price per share will be equal to the fair market value per
share on the date of grant, as determined by the last closing price
of the Company’s common stock the day prior to grant. Beginning in
October 2019, the board decided to increase CEO base salary to
$35,000 per month.
On April 24,
2017 the company entered into an employment agreement with Robert
Malasek, its Chief Financial Officer and Secretary. The agreement
does not have a set term and may be terminated at any time by the
Company or Mr. Malasek with proper notice. The shares were issued
in the 1st quarter 2018. Beginning in October 2019, the
board ratified to increase CFO base salary to $3,000 per
month.
On August
21, 2018, AXIM Biotechnologies, Inc. (the “Company”) entered into
an agreement with Revive
Therapeutics Ltd. (“Revive”) to begin selling the Company’s
flagship nutraceutical product throughout the rapidly expanding
Canadian cannabis market. The agreement defines a relationship
where Revive will seek regulatory approval for AXIM’s proprietary,
controlled-release functional chewing gum which contains hemp oil
and cannabidiol (CBD). Under the terms of the agreement, Revive
will have a minimum purchase amount annually, which increases each
year for the term of the agreement.
On September
10, 2018, AXIM Biotechnologies, Inc. (the “Company”) entered into a
Letter of Intent (“LOI”) with Impression Healthcare Limited
(“Impression”), Australia’s largest home dental impression company,
for exclusive distribution of all AXIM® Biotech products throughout
Australia and New Zealand.
Pursuant to
the LOI, both parties will endeavor to enter into a definitive
agreement whereby the parties will co-develop new products,
initially for pre-clinical and phase 1 trials (among other clinical
trials), including an oral rinse liquid targeted for the treatment
of oral mucositis, strep throat, oral infections and gum disease.
Pending initial discussions and an internal review of AXIM® Biotech
and its product offerings, Impression will collaborate with AXIM®
Biotech for the licensing and distribution of its current and
future medicinal cannabis products for distribution in Australia
and New Zealand. On December 20, 2018 the Company signed
Exclusivity Agreement on terms that include Exclusivity period of
90 days after the date on which this agreement is executed with
Impression in exchange for 10,300,000 ordinary fully paid shares in
Impression at the price of A$0.02 per share and exchange rate of
$0.74 AUD/USD valued $150,000 which the Company recognized as a
revenue in 4th quarter of 2018. During the year ended
December 31, 2019, the Company received another 2,000,000 shares
and sold 7,375,000 shares. On April 14, 2020 the Company entered
into deed of settlement and release with Impression Healthcare
Limited and transferred 4,925,000 held shares back to Impression
Healthcare Limited by way of sale and purchase, with the total
amount payable by Impression Healthcare Limited to Axim for
completion of the sale and purchase and transfer being the
aggregate amount of $1.
On May 31,
2019, AXIM Biotechnologies, Inc. (“AXIM”) entered into a
cannabinoid product supply agreement with Impression Healthcare
Limited (“Impression”), Australia’s largest home dental impression
company, for the supply of the AXIM’s toothpaste and mouthwash
containing cannabidiol (CBD) for its clinical trial for the
treatment of periodontitis. The supply agreement is in preparation
for a clinical trial to test the effectiveness of CBD in treating
periodontitis. The clinical trial will be performed at Swinburne
University of Technology in Melbourne, Australia. In accordance
with the agreement, AXIM will supply the first batch of its
patented toothpaste and mouthwash products containing CBD, along
with associated placebo units for Impression to perform a
randomized control clinical trial. On April 14, 2020 the Company
terminated its supply agreement with Impression Healthcare Limited
by mutual consent of both parties.
On July 2,
2019, AXIM Biotechnologies, Inc. (“AXIM”) entered into a
multi-term, non-exclusive license and distribution agreement
(“Agreement”) with Colorado based gum developer, KISS Industries,
LLC (“KISS Industries”). Under the terms of the Agreement, AXIM
grants KISS Industries a non-exclusive license to formulate and
sell products that fall within AXIM’s cannabinoid chewing gum
patent in exchange for royalties to be paid to AXIM based upon KISS
Industries sales in the United States and Mexico. The Agreement
also grants AXIM the right to: (i) acquire 10 percent of KISS
Industries under certain conditions; and (ii) match any outside
future offer to acquire KISS Industries as a whole. Further, AXIM’s
CEO John W. Huemoeller II will also join the Board of Directors of
KISS Industries.
In exchange
for this license Kiss Industries will pay Axim 6% of gross sales as
a royalty on all licensed products sold by Kiss. In the territory
covered by this license which is the USA and Mexico. (Minimum
annual royalty $50,000). Kiss will manufacture for Axim various
licensed products at a price equal to 140% of Kiss’s cost. As of
June 30, 2021 and December 31, 2020 Kiss Industries did not sell
any Axim’s products.
Industry
Sponsored Research Agreement— Sapphire entered into the Industry
Sponsored Research Agreement (“SRA”) effective February 7, 2020 to
test and confirm the inhibitory activity of SBI-183 (exclusively
licensed on January 13, 2020) and SBI-183 analogs, including those
synthesized by the Company. The testing will include cell-based in
vitro assays, NMR binding studies and testing to determine if
SBI-183 enhances the activity of cytotoxic drugs in vitro. Animal
studies will also be conducted under the SRA. Specifically, SBI-183
analogs will be evaluated in a mouse model of triple negative
breast cancer using human tumor xenografts. The work will be
performed over a period of one year with the total cost of the SRA
totaling $150,468 paid prior to acquisition. In consideration of
the License executed between Skysong Innovations and the Company,
the SRA provides for a reduced overhead of 5% instead of the usual
67.7%. This overhead fee differential of $89,851 will be deferred
for five (5) years with interest of 5% compounded annually. For the
six months ended June 30, 2021, the Company recorded research and
development expenses of $191,266.
On August 5,
2020 Sapphire was awarded a $395,880 phase I Small Business
Innovation Research (SBIR) grant by the National Cancer Institute
(NCI). The grant will support continued development of novel small
molecules that inhibit the enzymatic activity of Quiescin
Sulfhydryl Oxidase I (QSOX1) based on a lead compound. QSOX1 is a
tumor-derived enzyme that is important for cancer growth, invasion
and metastasis. Sapphire is conducting this research with
technology it has exclusively licensed from Skysong Innovations,
LLC, the intellectual property management company for Arizona State
University. Sapphire will subcontract tumor biology work for
evaluating analog inhibitors for QSOX1 to Dr. Doug Lake’s
laboratory at Arizona State University and Mayo Clinic Arizona.
Grant income received for the six months ended June 30, 2021 and
2020 was $159,995 and $-0-; respectively.
On August
25, 2020 we signed an exclusive licensing, manufacturing and
distribution agreement with Empowered Diagnostics LLC to execute
the high-volume production of our rapid point-of-care diagnostic
test. AXIM and Empowered have completed the technology transfer and
Empowered Diagnostics has built out their production facility to be
able to manufacture millions of our neutralizing antibody tests for
Covid-19 per month. In exchange for this license Empowered will pay
Axim a royalty on net sales on all licensed products sold by
Empowered covered by this license which global with the exception
of Mexico.
Operating
Lease
Lease
Agreement—On March 3, 2020, Sapphire entered into a 3-year lease
agreement (“Lease”) to relocate to a larger space within the same
business park. The new space totals 1,908 square feet with monthly
base rent in the 1st year $4,713, 2nd year $4,854 and 3rd year
$5,000 at implicit interest rate of 6%. Upon commencement of the
Lease on April 25, 2020, the previous lease will expire.
Operating
Leases - Right of Use Assets and Purchase Commitments Right of Use
Assets
We have
operating leases for office space that expire through 2023. Below
is a summary of our right of use assets and liabilities as of June
30, 2021.
Summary of Right of Use Assets and
Liabilities |
|
|
|
Right-of-use assets |
|
$ |
104,185 |
|
|
|
|
Lease
liability obligations, current |
|
$ |
58,540 |
Lease liability obligations,
noncurrent |
|
|
45,646 |
Total lease liability obligations |
|
$ |
104,186 |
|
|
|
|
Weighted-average remaining lease term |
|
|
1.83
years |
|
|
|
|
Weighted-average discount rate |
|
|
6% |
The
following table summarizes the lease expense for the three months
ended June 30, 2021 and 2020:
Summary of Lease
Expenses |
|
|
|
|
|
|
|
|
|
|
June 30, |
|
June 30, |
|
|
2021 |
|
2020 |
Operating lease expense |
|
$ |
28,560 |
* |
|
$ |
4,713 |
** |
Short-term lease expense |
|
|
7,379 |
|
|
|
10,458 |
|
Total
lease expense |
|
$ |
35,939 |
|
|
$ |
15,171 |
|
* |
We recorded $35,939 of
operating lease expense this includes $7,379 of
maintenance. |
** |
The first lease payment
was made and adjusted in preacquisition cost. |
Approximate
future minimum lease payments for our right of use assets over the
remaining lease periods as of June 30, 2021, are as
follows:
Schedule of Future Minimum Rental
Payments for Operating Leases |
|
|
|
|
Remainder of
2021 |
|
|
$ |
29,124 |
2022 |
|
|
|
59,416 |
2023 |
|
|
|
20,000 |
Total minimum
payments |
|
|
|
108,540 |
Less: amount
representing interest |
|
|
|
(4,354) |
Total |
|
|
$ |
104,186 |
|
|
|
|
|
Litigation
As of June
30, 2021, and this report issuing date, the Company is not a party
to any pending material legal proceeding. To the knowledge of
management, no federal, state or local governmental agency is
presently contemplating any proceeding against the Company. To the
knowledge of management, no director, executive officer or
affiliate of the Company, any owner of record or beneficially of
more than five percent of the Company’s Common Stock is a party
adverse to the Company or has a material interest adverse to the
Company in any proceeding.
NOTE 16: SUBSEQUENT
EVENTS
August 03,
2021,the Company announced that they have signed a Binding Term
Sheet to acquire the technology for the testing of Dry Eye Disease
(DED), including two FDA authorizations and approvals for the
commercial sale of two ophthalmic diagnostic lab tests.
AXIM and
Advanced Tear Diagnostics, LLC, have signed a Binding Term Sheet
and intend to enter into the Definitive Agreement for the
transaction to close no later than October 1, 2021. However, the
Binding Term Sheet will remain in full force and effect until such
time as the Definitive Agreement is executed by the parties. AXIM
intends to immediately implement the strategy for commercial launch
of the first product projected for the beginning of
2022.
August 10,
2021, the company issued 122,000 restricted
shares of its common stock to a third party valued at $50,000 pursuant to
a stock purchase agreement. The cash was received in
2021.
The company
issued
115,554 restricted s8 shares of its common stock valued at
$100,000
to a third party for prepaid consulting services. In addition the
vendor will be compensated at a rate of $7,500 per month. The
agreement has a one year term.
Item 2.
Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
WHERE YOU
CAN FIND MORE INFORMATION
We file
annual, quarterly and current reports, proxy statements and other
information required by the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), with the Securities and Exchange
Commission (the “SEC”). You may read and copy any document we file
with the SEC at the SEC’s public reference room located at
100 F Street, N.E., Washington, D.C. 20549, U.S.A. Please
call the SEC at 1-800-SEC-0330 for further information on the
public reference room. Our SEC filings are also available to the
public from the SEC’s internet site
at http://www.sec.gov.
On our
Internet website, http://www.aximbiotech.com, we post the
following recent filings as soon as reasonably practicable after
they are electronically filed with or furnished to the SEC: our
annual reports on Form 10-K, our quarterly reports on Form 10-Q,
our current reports on Form 8-K, and any amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of
the Exchange Act.
When we
use the terms “AXIM”, “Company”, “we”, “our” and “us” we mean Axim
Biotechnologies, Inc., a Nevada corporation, and its consolidated
subsidiaries, taken as a whole, as well as any predecessor
entities, unless the context otherwise indicates.
FORWARD
LOOKING STATEMENTS
This
Quarterly Report on Form 10-Q, the other reports, statements, and
information that the Company has previously filed with or furnished
to, or that we may subsequently file with or furnish to, the SEC
and public announcements that we have previously made or may
subsequently make include, may include, or may incorporate by
reference certain statements that may be deemed to be
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, as amended, and that are
intended to enjoy the protection of the safe harbor for
forward-looking statements provided by that Act. To the extent that
any statements made in this report contain information that is not
historical, these statements are essentially forward-looking.
Forward-looking statements can be identified by the use of words
such as “anticipate”, “estimate”, “plan”, “project”, “continuing”,
“ongoing”, “expect”, “believe”, “intend”, “may”, “will”, “should”,
“could”, and other words of similar meaning. These statements are
subject to risks and uncertainties that cannot be predicted or
quantified and, consequently, actual results may differ materially
from those expressed or implied by such forward-looking statements.
Such risks and uncertainties include, without limitation,
marketability of our products; legal and regulatory risks
associated with trading publicly; our ability to raise additional
capital to finance our activities; the future trading of our common
stock; our ability to operate as a public company; our ability to
protect our proprietary information; general economic and business
conditions; the volatility of our operating results and financial
condition; our ability to attract or retain qualified senior
management personnel and research and development staff; and other
risks detailed from time to time in our filings with the SEC, or
otherwise.
Information
regarding market and industry statistics contained in this report
is included based on information available to us that we believe is
accurate. It is generally based on industry and other publications
that are not produced for purposes of securities offerings or
economic analysis. Forecasts and other forward-looking information
obtained from these sources are subject to the same qualifications
and the additional uncertainties accompanying any estimates of
future market size, revenue and market acceptance of products and
services. We do not undertake any obligation to publicly update any
forward-looking statements. As a result, investors should not place
undue reliance on these forward-looking statements.
Overview
Axim
Biotechnologies, Inc., a Nevada corporation, was originally
incorporated in the State of Nevada on November 18, 2010, under the
name AXIM International, Inc. On July 24, 2014, we changed our name
to AXIM Biotechnologies, Inc. to better reflect our business
operations. Our principal corporate headquarters are located at
6191 Cornerstone Court, E., Suite 114, San Diego, CA 92121. Our
website address is www.aximbiotech.com. The information contained
on, or that can be accessed through, our website is not a part of
this prospectus. The trademarks, trade names and service marks
appearing in this prospectus are the property of their respective
owners.
Acquisition of
Sapphire Biotech, Inc.
On March 17,
2020, the Company entered into a Share Exchange Agreement
(“Agreement”) with Sapphire Biotech, Inc., a Delaware corporation
(“Sapphire”) and all of the Sapphire stockholders (collectively,
the “Sapphire Stockholders”). Following the closing of the
transaction, Sapphire became a wholly owned subsidiary of
AXIM.
Current
Operations Following the Acquisition of Sapphire Biotech,
Inc.
Oncology
We
continue to advance our
mission of improving global cancer care through the development of
novel therapeutics for controlling metastatic
cancer spread, and
diagnostics for early cancer detection, response to treatment, and
for monitoring post-treatment recurrence. We have made significant
progress with the development of additional anologs of SBI-183
licensed from Mayo Clinic and Arizona State
University.
We have been
investigating the enzyme Quiescin Sulfhydryl Oxidase 1 (QSOX1), a
master regulator of extracellular matrix remodeling, and its
overexpression by tumor cells. Overexpression of QSOX1 has been
unambiguously linked to promoting tumor invasion and metastasis.
One of the Company’s co-founders, Dr. Douglas Lake, has discovered
that a small molecule SBI-183 inhibited the enzymatic activity of
QSOX1 and as a result suppressed tumor cell invasion in
vitro and metastasis of breast tumor cells in vivo.
Through its medicinal chemistry efforts the Company synthesized
multiple structural analogs of SBI-183 and unveiled SPX-1009 lead
compound that demonstrated ten-fold improvement in suppressing
invasion and metastasis in several cancer models.
The Company
believes that its therapeutic drug development strategy targeting
the metastatic spread is a unique, novel and pioneering approach to
saving lives. The near-term objective of the Company is to
demonstrate the ability of its lead anti-QSOX1 drug candidates to
suppress tumor growth and metastasis and to advance them into
pre-clinical studies.
Additionally, the
Company believes that QSOX1 has a significant potential to be
developed into an important biomarker for liquid biopsy cancer
test. The Company anticipates that ongoing diagnostic product
development in 2020 will result in a commercial prototype in early
2021 of a universal companion diagnostic to measure the efficacy of
any ongoing cancer treatments based on measuring QSOX1 levels.
Ultimately, the Company aims to develop a blood test that makes
possible the early detection of cancer.
Covid-19
With the
onset of the COVID-19 pandemic, we began creating COVID-19 rapid
diagnostic tools, including multiple first-in-class COVID-19
neutralizing antibody tests and other innovations. AXIM’s rapid
diagnostic test for detecting neutralizing antibodies is the first
of its kind. The test has the ability to deliver results in under
10 minutes and can detect the level of neutralizing antibodies an
individual has. We have designed this test to be used at
point-of-care facilities to measure levels of neutralizing
antibodies in convalescent plasma so that plasma with the highest
levels of neutralizing antibodies can be identified and
administered to patients fighting COVID-19. Without this knowledge,
many patients could be undertreated with non-neutralizing plasma
and may not benefit from this treatment. Another application of our
point-of-care test is to help ensure that vaccines and monoclonal
antibody drugs elicit high levels of neutralizing antibodies. When
a vaccine is available, manufacturers can employ AXIM’s rapid
point-of-care test to evaluate protective immune responses in
vaccine recipients.
Our high
throughput rapid neutralizing antibody test, NeuCovix-HT™, was
designed to solve a major issue that COVID-19 researchers are
currently facing. NeuCovix-HT™ solves the problem of vaccine and
monoclonal antibody drug manufacturers’ requirement in Phase 3
clinical trials to measure neutralizing antibody levels
longitudinally in large groups of volunteer recipients using
expensive and laborious virus-based assays. Clinical centers
participating in the vaccine trials could employ NeuCovix-HT™ tests
to measure neutralizing antibodies from vaccine recipients in
thousands of plasma samples per day and be able to test all
recipient’s multiple times.
As more of
the population recovers from COVID-19, we believe NeuCovix-HT™ will
benefit clinical laboratories running batches of thousands of tests
per week to measure levels of neutralizing antibodies in COVID-19
convalescent plasma. NeuCovix-HT™ distinguishes which convalescent
plasmas contain low and high levels of neutralizing antibodies so
that patients fighting COVID-19 can be treated with plasma from
donors with the highest levels of neutralizing antibodies. We are
in the process of sourcing materials and optimizing the test and
expect to finish in the first quarter of 2021.
As our
scientific team was hard at work developing our COVID-19 rapid
diagnostic tests and virus-capturing face mask, we were frustrated
by the delays and costs caused by lack of supply of a recombinant
virus binding protein (VBP) for SARS-CoV-2 that was essential to
our testing. To continue our projects as planned and decrease
overall costs, AXIM’s talented team decided to make its own VBP
that is even more potent than current outsourced options. AXIM’s
laboratory tests have proven the RBD spike protein binds with our
novel VBP. Initial tests also show that our novel VBP is
approximately 10 times more potent and stable than current VBP
options on the market. This now in-house development of the core
ingredients needed to manufacture strips and masks could
potentially derive additional revenue and allows us to control our
supply chain. We have already manufactured enough VBP for millions
of rapid diagnostic tests.
In August,
we signed an exclusive licensing, manufacturing and distribution
agreement with Empowered Diagnostics LLC to execute the high volume
production of our rapid point-of-care diagnostic test. AXIM and
Empowered have completed the technology transfer and Empowered
Diagnostics has built out their production facility to be able to
manufacture millions of our tests per month. As what we believe to
be the last step for the EUA application already filed with the FDA
for our plasma test we will be conducting a live virus comparison
study on 30 plasma samples at a Biosafety Level 3 (BSL3)
laboratory. As soon as this comparison study is finished, we will
amend the EUA and we expect to begin sales and manufacturing
immediately and we expect to see significant revenue shortly
thereafter.
We have also
received Institutional Review Board approval to begin a clinical
study at Arizona State University with our point-of-care whole
blood test as the last step in what will be another EUA
application. We hope to be the first FDA-approved rapid
point-of-care test for neutralizing antibodies.
Milestones 2020 to
Date
On January
13, 2020, Sapphire Biotech enters into an agreement with Skysong
Innovations, LLC for an exclusive license to technology relating to
SBI-183, an anti-metastatic compound suppressing tumor cell growth
and blocking metastasis (and grants equity to Mayo Clinic Ventures
and Arizona State University).
On February
6, 2020, Sapphire Biotech signs Sponsored Research Agreement (SRA)
with Arizona State University to conduct in vitro testing
and in vivo pre-clinical animal studies re cancer inhibitory
agents that will prevent metastases.
On March 18,
2020, Axim Biotechnologies announces the acquisition of Sapphire
Biotech.
On March 24,
2020, Sapphire announces the completion of in-vitro
studieson the new compound, SPX-1009 proving ten-fold greater
inhibition of tumor metastasis than parent compound SBI-183
following testing of over 80 analogs.
On March 27,
2020, Sapphire Biotech signs an agreement with TD2 to initiate
animal studies to evaluate the efficacy of SPX-1009 as an
anti-metastatic treatment and to measure levels of QSOX1 as a
potential companion diagnostic test.
On July 15,
2020, AXIM announced the development of a rapid diagnostic test
measuring levels of functional neutralizing antibodies that are
believed to prevent SARS-CoV-2 from entering the host cells. Unlike
currently available serological COVID-19 tests that detect an
antibody response to the virus, AXIM’s rapid 10-minute test
measures a specific subpopulation of antibodies to block binding of
the virus to host cell receptors. While there are expensive, time
consuming laboratory tests that measure neutralizing antibodies,
AXIM’s test differs in that it is a portable, low cost, rapid
point-of-care test with results in 10 minutes. Status:
Ongoing
On August 5,
2020, announced today the development, patent filing and Emergency
Use Approval (EUA) filing of NeuCovix-HT™, a high throughput (HT)
patent-pending diagnostic test that measures levels of functional
antibodies in plasma or serum that neutralize SARS-CoV-2, the virus
that causes COVID-19. Unlike current serology tests for COVID-19
that qualitatively detect antibodies to the virus,
NeuCovix-HT™ quantitatively measures functional antibodies
that block binding of the virus to host cell receptors. Status:
Ongoing
On August
11, 2020, Sapphire was awarded a $395,880 phase I Small Business
Innovation Research (SBIR) grant by the National Cancer Institute
(NCI). The grant will support the continued development of novel
small molecules that inhibit the enzymatic activity of Quiescin
Sulfhydryl Oxidase I (“QSOX1”) based on a lead compound. QSOX1 is a
tumor-derived enzyme that is important for cancer growth, invasion
and metastasis. Status: Ongoing
On August
24, 2020, Axim signed an exclusive limited licensing, manufacturing
and distribution agreement with Empowered Diagnostics LLC
(“Empowered Diagnostics”) for high volume production of AXIM’s
rapid diagnostic test measuring levels of functional neutralizing
antibodies that are believed to prevent SARS-CoV-2 from entering
the host cells. Status: Ongoing
On September
16, 2020, re filed the Emergency Use Authorization (EUA)
application with the Food and Drug Administration (FDA) for
measuring COVID-19 neutralizing antibodies in plasma and serum
through its first-in-class rapid diagnostic test. Status:
Ongoing
On September
22, 2020, Axim announced that the United States Patent and
Trademark Office (USPTO) has issued the Company a new Notice of
Allowance for a patent (Application No. 15/748,784) on
anti-neoplastic compounds and methods targeting Quiescin Sulfhydryl
Oxidase 1 (QSOX1), an enzyme important for tumor cell growth,
invasion and metastasis.
On September
29, 2020, Axim announced that it has filed a provisional patent for
a first-in-class face mask that captures and deactivates
SARS-CoV-2, the coronavirus responsible for the ongoing COVID-19
pandemic. Status: Ongoing
On September
30, 2020, Axim announced today that it has filed a provisional
patent for a recombinant virus binding protein (VBP) for
SARS-CoV-2, the coronavirus responsible for the current COVID-19
pandemic, and is now manufacturing the VBP. The Company no longer
needs to rely on outside protein supply to continue our research
and can greatly cut down on our manufacturing costs.
On December
3, 2020, we announced the development and patent filing for an
enzyme-linked immunosorbent assay (“ELISA”)-based diagnostic test
for the detection of SARS-CoV-2 neutralizing antibodies. Status:
Ongoing
On February
3, 2021, we announced the initiation of clinical trials for
ImmunoPass, our rapid point-of-care test that semi-quantitatively
measures levels of neutralizing antibodies to COVID-19. Status:
Ongoing
On March 8,
2021, we announced that we had successfully completed point-of-care
clinical trials on our much awaited ImmunoPass rapid test that
semi-quantitatively measures levels of COVID-19 neutralizing
antibodies to help understand COVID-19 immunity, validate vaccine’s
effectiveness and estimate how long the vaccine will be effective
in patients.
On March 24,
2021, the Company, through Empowered Diagnostics, filed an EAU
application with the FDA for measuring COVID-19 neutralizing
antibodies in whole blood for a Point-of-Care rapid diagnostic
test. Status: Ongoing
Anticipated
Expenses
During the
next twelve months we anticipate incurring costs related to: (i)
filing Exchange Act reports, (ii) contractual obligations, (iii)
clinical trials, and (iv) continued research and
development.
Intellectual
Property
I.
QSOX1-RELATED INVENTIONS.
QSOX1
(Quiescin Sulfhydryl Oxidase 1) is an enzyme that is over-expressed
in multiple tumor types. Genetically silencing QSOX1 in tumors
slows their growth, migration, invasion and metastasis. Based on
these findings, the inventors of the inventions described below
tested libraries of chemical compounds for the ability to inhibit
QSOX1. Several inhibitors of the QSOX1 enzyme were identified.
Initially, SBI-183 was identified and animal studies confirmed its
ability to suppress tumor growth. The inventors subsequently
developed an entire library of analogs of the parent compound,
SBI-183, detailed in several inventions below to identify compounds
with greater inhibitory activity. These compounds have the
potential to be developed into therapeutic treatments for
metastasis and to be used in conjunction with other neoplastic
treatments, such as chemotherapy.
Included in
the group of QSOX1-related inventions below is the identification
of a specific splice variant of QSOX1, identified as QSOX1-L, as a
unique Biomarker for the detection of certain tumors overexpressing
QSOX1. This biomarker formed the basis for the invention relating
to a Rapid Diagnostic Test for certain cancers.
A.
Anti-Neoplastic Compounds and Methods Targeting QSOX1
1.US
Provisional Patent Application No. 62/218.732 filed on September
15, 2015
PCT
Provisional Patent Application W02017048712A1
US
Nonprovisional Application No. 15/748,784 filed on January 30,
2018
Notice of
Patent Allowance dated September 17, 2020
Title:
Anti-Neoplastic Compounds and Methods Targeting QSOX1
Assignee:
Mayo Clinic/Arizona State University
Exclusive
Licensee: Axim Biotechnologies, Inc.
Compounds
and methods involving inhibition of the enzymatic activity of
QSOX1. The compounds and methods can be used in treatment of
neoplastic cells to suppress tumor growth and invasion in a variety
of cancers, including but not limited to myeloma and cancers of the
breast, kidneyand pancreas. Claims include the compound SBI-183 as
a neoplastic agent found to inhibit tumor growth, invasion and
suppress metastasis of tumors by inactivating QSOX1.
2. US
Provisional Patent Application No. 62/916,065 filed on October 16,
2019
Title:
Chemical Compounds that Inhibit QSOX1 for the Treatment of
Cancer
Assignees:
Arizona State University/Axim Biotechnologies, Inc.
Derivatives
of the parent compound SBI-183 have been identified as inhibiting
the enzymatic activity of QSOX1. These compounds can be used in
treatment of neoplastic cells by suppressing tumor growth and
invasion in a variety of cancers that overexpress QSOX1, including
but not limited to myeloma and cancers of the breast, kidney and
pancreas.
3. US
Provisional Patent Application No. 62/916,067 filed October 16,
2019
Title:
Anti-Neoplastic Compounds and Methods Targeting QSOX1
Assignees:
Arizona State University/Axim Biotechnologies, Inc.
Exclusive
Licensee: Axim Biotechnologies, Inc.
Compounds
that are structurally distinguishable from the compound, SBI-183
are SPX-013 and SPX-014, and have been identified as inhibiting the
enzymatic activity of QSOX1. The compounds and methods can be used
in treatment of neoplastic cells by suppressing tumor growth and
invasion in a variety of cancers, including but not limited to
myeloma and cancers of the breast, kidney and pancreas.
4.US
Provisional Patent Application No. 62/944/283 filed December 5,
2019
Title:
Anti-Neoplastic Compounds and Methods Targeting QSOX1
Assignees:
Arizona State University/Sapphire Biotech, Inc.
Exclusive
Licensee: Axim Biotechnologies, Inc.
Compounds
that are structurally distinguishable from the SBI-183 have been
identified as inhibiting the enzymatic activity of QSOX1. One in
particular, SPX-1009, also inhibits tumor cell growth, migration
and invasion in vitro and metastasis in a mouse model of triple
negative breast cancer. This invention concerns analogs of this
lead compound SPX-1009. In in vitro testing, the lead compound
SPX-1009 and its analogs have been found to be more potent and to
have improved pharmacodynamics in mouse models of
cancer.
5.US
Provisional Patent Application No. 62959752 filed January 10, 2020
Title:
Anti-Neoplastic Compounds and Methods Targeting QSOX1 and
Inhibiting Cellular Responses to MET Receptor.
Assignee:
Axim Biotechnologies, Inc.
Compounds
and methods involving inhibition of the enzymatic activity of QSOX1
and methods of inhibiting cellular responses to the MET receptor
signaling are disclosed which include administering any one or more
compounds or pharmaceutical compositions. The compounds and methods
can be used in treatment of neoplastic cells, for example, to
suppress tumor growth and invasion in a variety of cancers,
including but not limited to myeloma and cancers of the breast,
kidney and pancreas. The uniqueness of the invention relates to the
combined inhibition of QSOX1 and cellular responses to the MET
receptor signaling.
B.
Unique Biomarker QSOX1-L Identified and Rapid Diagnostic for
Various Cancers
1. US
Provisional Patent Application No. 62/829,556 filed April 4, 2019;
Utility
Patent Application No. 16/841,521 filed April 6, 2020
International Patent
Application No. PCT/US2020/026936 filed April 6, 2020
Title:
Systems and Methods for Rapid Diagnostic for Various
Cancers
Assignee:
Axim Biotechnologies, Inc.
QSOX1-L, a
splice variant of QSOX1, has been identified as a novel biomarker
of bladder cancer and possibly other cancers in serum. Proprietary
antibodies have been generated that selectively detect only this
variant and not others. QSOX1-L has been used to develop a rapid
and cost-effective diagnostic test for bladder and possibly other
urologic cancers from urine.
II.
SARS-CoV-2-RELATED INVENTIONS
A.
Rapid Diagnostic Test to Measure Levels of Neutralizing
Antibodies to SARS-CoV2
1. US
Provisional Application No. 63/023,646 filed May 12,
2020
Title:
Convalescent Plasma Testing and Treatment
Assignee:
Axim Biotechnologies, Inc. (Axim) and Arizona State University
(ASU)
Exclusive
Licensee: Axim Biotechnologies, Inc. (ASU’s Interest) Exclusive
Licensee: Empowered Diagnostics, Inc. (Axim’s Interest)
The
invention refers to a Rapid Test to measure levels of Neutralizing
Antibodies to SARS-CoV2. Unlike currently available serological
COVID-19 tests that detect an antibody response to the virus, the
rapid 10-minute test measures a specific subpopulation of
antibodies that block binding of the virus to host cell receptors.
In contrast to current tests using live viruses which are
time-consuming, expensive and require trained personnel in a
tightly controlled laboratory setting to measure neutralizing
antibodies, the rapid test is a portable, low cost, rapid point-
of-care test that measures levels of neutralizing antibodies in 10
minutes.
2. US
Provisional Application No. 63/144,454 Filed February 1, 2021; US
Provisional Application No. 63/152,774 Filed February 23,
2021
Title: Rapid
LFA Diagnostic Test to Measure Levels of Neutralizing Antibodies to
SARS- CoV-2 from Whole Blood
Assignee:
Axim Biotechnologies, Inc.
Exclusive
Licensee: Empowered Diagnostics, Inc.
The
invention methods and test kits can be used with any sample in
which the presence, absence and/or quantity of neutralizing
antibodies (nAbs) to SARS-CoV-2 is desired to be determined, such
as for example, serum, plasma, whole blood, saliva, mucous, and
other biological fluids. In a particular embodiment, the invention
methods and/or kits are used with whole blood.
B.
AlphaLisa Assay for High Throughput Detection of Neutralizing
Antibodies to SARS-CoV2
1. US
Provisional Application No. 63/060,635 filed August 3, 2020; US
Provisional Application No. 63/061,112 filed August 4,
2020
Title:
NeuCovix-HT AlphaLisa assay for high throughput detection of
Neutralizing Antibodies to SARS-CoV-2
Assignee:
Axim Biotechnologies, Inc. and Arizona State University
(ASU)
Exclusive
Licensee: Axim Biotechnologies, Inc. (ASU’s Interest)
The
invention refers to an AlphaLisa assay for high throughput (HT)
detection of Neutralizing antibodies to SARS-CoV-2. Included in the
claims is the HT diagnostic test that measures levels of functional
antibodies in plasma or serum that neutralize SARS- CoV-2, the
virus that causes COVID19. Unlike current serology tests for COVID
19 that qualitatively detect antibodies to the virus, the HT test
quantitatively measures functional antibodies that block binding of
the virus to host cell receptors.
C.
Direct Competitive ELISA for the Detection of SARS-Cov2
Neutralizing Antibodies
1. US
Provisional Application No. 63/152,807 filed February 23,
2021
Title:
Direct Competitive ELISA for the Detection of SARS-CoV2
Neutralizing Antibodies
Assignee:
Axim Biotechnologies, Inc.
The
invention relates to a method for rapid detection of SARS-CoV2
Neutralizing Antibodies in one of the following test samples: human
or animal serum, plasma, saliva, tear, sweat, exhaled breath
condensate. The test sample is mixed with an ACE2 label detection
reagent. The sample mixture is incubated, and the quantity of ACE2
label detection reagent bound to the RBD molecules indicates the
quantity of SARs-Co2 Neutralizing Antibodies.
D.ACE2
Variants
1. US
Provisional Application No. 63/081,811 filed September 22,
2020
Title:
Super-ACE2 Variants
Assignee:
Axim Biotechnologies, Inc.
The
invention relates to a new variant recombinant protein of ACE2
identified as ACE2-614-Fc (“Super ACE2”), that is more potent and
has a longer shelf life and is more stable than wild type ACE2.
Super ACE2 variant can be used in a variety of ways as
follows:
1)Development
of competitive assays for neutralizing antibodies that disrupt RBD-
ACE2 interaction.
2)Direct
assays for virus spike antigens. Super ACE2 acts as a very specific
antibody to capture Spike proteins through the RBD
domain.
3)Cardio-vascular,
blood-pressure and related disorders therapeutic and
diagnostic.
4)Anything
related to the virus capture such as (i) Mask treatments, (ii)
Aerosols, (iii) Sprays and drops, (iv) Ointment and dermal
applications, (v) Surfaces
E.
Facemask Having Enhanced Infectious Agent Capturing and Related
Methods
1. US
Provisional Application No. 63/066,104 filed August 14,
2020
Title:
Facemask Having Enhanced Infectious Agent Capturing and Related
Methods
Assignee:
Axim Biotechnologies, Inc.
The
invention is a facemask with a filtration material and an
infectious agent capture-moiety. Infectious agent capture-moiety
refers to any compound or biomolecule that can bind to any
infectious agent. The filtration material acts as a scaffold to
either directly block or impede the flow-through of the infectious
agent or to support the infectious agent capture moiety. The
infectious agent capture- moiety then functions to directly block
or impede the flow-through of an infectious agent. The infectious
agent-capture moiety can aerosolized and sprayed or applied onto
pre-treated filtration material and can be specific to capture
infectious agents, such as SARS-CoV-2. In such embodiments, the
facemasks is capable of providing enhanced protection for the user
and to others from SARS-Co
III.
CANNABINOIDS
A.
Polyfunctional Cannabinoids
1. US
Provisional Patent Application No 3/014,471 filed April 23,
2020
Title:
Polyfunctional Cannabinoids
Assignee:
Axim Biotechnologies, Inc.
The
invention relates to cannabinoid constructs that may produce more
potent response than individual cannabinoid molecules with the
additional benefit of being more water- soluble and
bioavailable.
Trade
Secrets
We rely, in
some circumstances, on trade secrets to protect our technology.
However, trade secrets can be difficult to protect. We seek to
protect our proprietary technology and processes, in part, by
entering into confidentiality agreements with our employees,
consultants, scientific advisors and contractors. We also seek to
preserve the integrity and confidentiality of our data and trade
secrets by maintaining physical security of our premises and
physical and electronic security of our information technology
systems. While we have confidence in these procedures, agreements
or security measures may be breached, and we may not have adequate
remedies for any breach. In addition, our trade secrets may
otherwise become known or be independently discovered by
competitors. To the extent that our consultants, contractors, or
collaborators use intellectual property owned by others in their
work for us, disputes may arise as to the rights in related or
resulting know-how and inventions.
Market,
Customers and Distribution Methods
Our focus is
on the development of innovative diagnostic and pharmaceutical
products focusing on diseases and conditions for which currently
there are no known efficient therapeutic ingredients or delivery
systems. We plan to be an active player in this field of
biosciences with our extensive R&D and pipeline of innovative
products.
In August,
we signed an exclusive licensing, manufacturing, and distribution
agreement with Empowered Diagnostics LLC to execute the high-volume
production of our rapid point-of-care diagnostic test. AXIM and
Empowered have completed the technology transfer and Empowered
Diagnostics have built out their production facility to be able to
manufacture millions of our neutralizing antibody tests for
Covid-19 per month.
Competition
The biotech
industries are characterized by rapidly advancing technologies,
intense competition, a strong emphasis on proprietary products and
intellectual property. While we believe that our scientific
knowledge, technology, and development experience provide us with
competitive advantages, we face potential competition from many
different sources, including major pharmaceutical, specialty
pharmaceutical and biotechnology companies, academic institutions,
governmental agencies and public and private research institutions,
some or all of which may have greater access to capital or
resources than we do. For any products that we may ultimately
commercialize, not only will we compete with any existing
diagnostic tests and therapies and those products currently in
development, but we will also have to compete with new technologies
that may become available in the future.
We expect
that the market will become increasingly competitive in the future.
Many of our competitors, either alone or together with their
collaborative partners, operate much larger research and
development programs, and have substantially greater commercial and
financial resources than we do, as well as significantly greater
experience in: developing product candidates and technologies,
undertaking preclinical studies and clinical trials, obtaining FDA
and other regulatory approvals of product candidates, formulating
and manufacturing diagnostic products and drug candidates and
launching, marketing and selling these candidates. As a result,
these companies may obtain marketing approval more rapidly than we
are able and may be more effective in developing, selling, and
marketing their products.
Source
and Availability of Raw Materials
As our
scientific team was developing our COVID-19 rapid diagnostic tests
and virus-capturing face mask, we were frustrated by the delays and
costs caused by lack of supply of a recombinant virus binding
protein (VBP) for SARS-CoV-2 that was essential to our testing. To
continue our projects as planned and decrease overall costs, AXIM’s
team decided to make its own VBP. This now in-house development of
the core ingredients needed to manufacture our products allows us
to control our supply chain.
Government
Regulation
On July 15,
2020, we announced the submission of an Emergency Use Authorization
(“EUA”) to the FDA for our rapid diagnostic test kit for the
independent detection of neutralizing antibodies in sera of
patients who had been exposed to the SARS-CoV-2 virus.
On August 5,
2020, announced the development, patent filing and Emergency Use
Approval (EUA) filing of NeuCovix-HT™, a high throughput (HT)
patent-pending diagnostic test that measures levels of functional
antibodies in plasma or serum that neutralize SARS-CoV-2, the virus
that causes COVID-19. Unlike current serology tests for COVID-19
that qualitatively detect antibodies to the virus,
NeuCovix-HT™ quantitatively measures functional antibodies
that block binding of the virus to host cell receptors.
An EUA would
allow us to market and sell the test without the need to pursue the
lengthy and expensive drug approval process. The FDA may issue an
EUA during a public health emergency if it determines that the
potential benefits of a product outweigh the potential risks and if
other regulatory criteria are met. If an EUA is granted for the
test, we will rely on the FDA policies and guidance in connection
with the marketing and sale of the test. If these policies and
guidance change unexpectedly and/or materially or if we
misinterpret them, potential sales of the test could be adversely
impacted. In addition, the FDA may revoke an EUA where it is
determined that the underlying health emergency no longer exists or
warrants such authorization. If granted, we cannot predict how long
an EUA for the test will remain in place. The termination of an EUA
for the test, if granted, could adversely impact our business,
financial condition, and results of operations.
We may also
seek additional EUAs from the FDA for our other product candidates
for the detection and/or treatment of COVID-19 and
the SARS-CoV-2 virus. If granted, the additional EUAs
would allow us to market and sell additional product
candidates without the need to pursue the lengthy and
expensive drug approval process. There is no guarantee that we
will be able to obtain any additional EUAs. Failure to
obtain additional EUAs or the termination of
such EUAs, if obtained, could adversely impact our
business, financial condition, and results of
operations.
Employees
As of August
22, 2021, we have 4 full-time employees and 1 part-time employee.
We allow and utilize the services of independent contractors. We
will be considering the conversion of some of our part-time
employees to full-time positions. We are currently in discussions
with qualified individuals to engage them for positions in sales
and marketing, research and development, and operations. Management
believes the Company has good relationships with its
employees.
Costs and
effects of compliance with environmental laws
The expense
of complying with environmental regulations is of minimal
consequence.
Results
of Operations
The
following discussion of our financial condition and results of
operations for the period ended June 30,2021 should be read in
conjunction with the financial statements and the notes to those
statements that are included elsewhere in this Report on Form 10-Q.
Our discussion includes forward-looking statements based upon
current expectations that involve risks and uncertainties, such as
our plans, objectives, expectations, and intentions. Actual results
and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of a
number of factors. We use words such as “anticipate”, “estimate”,
“plan”, “project”, “continuing”, “ongoing”, “expect”, “believe”,
“intend”, “may”, “will”, “should”, “could”, and similar expressions
to identify forward-looking statements.
Comparison of the
six months and three months ended June 30, 2021 to June 30,
2020.
For the six
months periods ended June 30, 2021 and 2020, our revenues from
continuing operations totaled $47,524 and $-0-, respectively, our
revenues from discontinued operations totaled $-0- and $7,990,
respectively.
|
|
Six
months
Period
Ended
30-Jun-21
|
|
Six
months
Period
Ended
30-Jun-20
|
|
$ Change |
|
% Change |
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
149,019 |
|
|
$ |
126,292 |
|
|
$ |
22,727 |
|
|
|
18.00 |
% |
Depreciation |
|
|
13,184 |
|
|
|
5,124 |
|
|
|
8,060 |
|
|
|
157.30 |
% |
Advertising and promotions |
|
|
673,283 |
|
|
|
362,487 |
|
|
|
310,796 |
|
|
|
85.74 |
% |
Travel and entertainment expenses |
|
|
29,032 |
|
|
|
14,349 |
|
|
|
14,683 |
|
|
|
102.33 |
% |
Office/Other expenses |
|
|
69,142 |
|
|
|
73,698 |
|
|
|
(4,556 |
) |
|
|
-6.12 |
% |
Impairment and amortization |
|
|
641,142 |
|
|
|
6,763 |
|
|
|
634,379 |
|
|
|
9379.46 |
% |
Licenses and permits |
|
|
19,473 |
|
|
|
54,271 |
|
|
|
(34,798 |
) |
|
|
-64.12 |
% |
Legal and other fees |
|
|
178,404 |
|
|
|
221,882 |
|
|
|
(43,478 |
) |
|
|
-19.60 |
% |
Offices salary and wages |
|
|
503,335 |
|
|
|
294,399 |
|
|
|
208,936 |
|
|
|
70.97 |
% |
Consulting fees |
|
|
440,865 |
|
|
|
33,000 |
|
|
|
407,865 |
|
|
|
1235.95 |
% |
Compensation costs |
|
|
191,266 |
|
|
|
8,200 |
|
|
|
183,066 |
|
|
|
2232.51 |
% |
Audit fees |
|
|
96,171 |
|
|
|
81,703 |
|
|
|
14,468 |
|
|
|
17.71 |
% |
Filing fees |
|
|
5,619 |
|
|
|
4,898 |
|
|
|
721 |
|
|
|
14.72 |
% |
Insurance expense |
|
|
46,627 |
|
|
|
62,166 |
|
|
|
(15,539 |
) |
|
|
-25.00 |
% |
Directors fees |
|
|
40,000 |
|
|
|
40,000 |
|
|
|
— |
|
|
|
0.00 |
% |
Total Operating expenses from
continuing operations |
|
$ |
3,096,562 |
|
|
$ |
1,389,232 |
|
|
$ |
1,707,330 |
|
|
|
122.90 |
% |
Our
operating expenses from continuing operations for the six months
periods ended June 30, 2021 and 2020, were $3,096,562 and
$1,389,232, respectively. Our operating expenses from discontinued
operations for the six months periods ended June 30, 2021 and 2020,
were $4,633 and $357,430, respectively. The Company incurred
$440,865 and $33,000 of Consulting fees included in above table is
the largest changes are Impairment and Amortization of Other Assets
of $641,142 this include the three months of amortization of
intangible asset and $325,115 is because of the increase in Meeting
and Conference during the six months ended June 30, 2021 and 2020,
respectively.
For the
three months periods ended June 30, 2021 and 2020, our revenues
from continuing operations totaled $14,875 and $-0-, respectively,
our revenues from discontinued operations totaled $-0- and $849,
respectively.
|
|
Three
months
Period
Ended
30-Jun-21
|
|
Three
months
Period
Ended
30-Jun-20
|
|
$ Change |
|
% Change |
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
48,066 |
|
|
$ |
121,437 |
|
|
$ |
(73,371 |
) |
|
|
-60.42 |
% |
Depreciation |
|
|
6,834 |
|
|
|
4,285 |
|
|
|
2,549 |
|
|
|
59.49 |
% |
Advertising and promotions |
|
|
564,296 |
|
|
|
42,476 |
|
|
|
521,820 |
|
|
|
1228.51 |
% |
Travel and entertainment expenses |
|
|
21,153 |
|
|
|
1,303 |
|
|
|
19,850 |
|
|
|
1523.41 |
% |
Office/Other expenses |
|
|
37,094 |
|
|
|
30,348 |
|
|
|
6,746 |
|
|
|
22.23 |
% |
Impairment and amortization |
|
|
641,096 |
|
|
|
3,125 |
|
|
|
637,971 |
|
|
|
20415.07 |
% |
Licenses and permits |
|
|
2,622 |
|
|
|
1,270 |
|
|
|
1,352 |
|
|
|
106.46 |
% |
Legal and other fees |
|
|
87,759 |
|
|
|
134,014 |
|
|
|
(46,255 |
) |
|
|
-34.51 |
% |
Offices salary and wages |
|
|